The CEOs of Nvidia and Arm expressed confidence in getting regulatory approvals for their US$40 billion merger despite Chinese experts expressing doubt that authorities in Beijing will sign off on the deal.
Speaking on Tuesday at the Arm DevSummit 2020 conference, Nvidia CEO Jensen Huang and Arm CEO Simon Segars said the acquisition would create a new platform to drive innovations in the age of artificial intelligence.
“We are confident that it’s going to go through. Regulators around the world would realise that these are two complementary companies,” Huang said, adding that the combined firms would drive innovation and be beneficial to customers.
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Segars said regulators would see the deal as positive because it would be “enabling more people to do more things”.
However, he said regulatory scrutiny of the deal was “going to take a while” given the dominant roles both companies play in the industry. “There is a process to go through … but we will get to the end of that,” Segars said.
During their 20 minute discussion, which was online, Huang and Segars did not mention any regulators by name. Chinese regulators are seen by some analysts as a potential obstacle to completing the deal given that relations between China and the US have reached their lowest point in decades after a protracted trade spat morphed into a full blown tech war.
Influential voices in China are not keen on the deal going through. Ni Guangnan, a long time advocate for China‘s self-sufficiency in key technologies and the former chief engineer of Chinese PC giant Lenovo Group, believes Beijing may block the transaction over fears that Arm’s technology would fall under US export controls after the takeover.
“If the acquisition were to happen, it could bode ill for us,” Ni said at a forum held in Zhengzhou, Henan province, last month.
China’s antitrust regulator has the power to block the deal on the premise that it could create a monopoly for the supply of chip design tools.
When Qualcomm bid US$44 billion to buy Dutch chip maker NXP Semiconductors four years ago, China was the only jurisdiction that did not approve the merger. The deal collapsed just over 18 months later, adding to then already tense relations between the world’s two largest economies.
Arm, which developed the chip architecture widely used in smartphones, is currently owned by Japanese investment bank SoftBank. Last month US-based Nivida, a leader in GPU and AI computing chips, agreed to buy Arm for US$40 billion.
Arm entered the China market in 2002 and now holds a commanding lead in the market, deriving about 20 per cent of its revenue from Chinese tech companies, according to a Reuters report.
Arm’s 200 Chinese licensees, which include Huawei Technologies, have shipped more than 19 billion chips as of mid-September. After Huawei was put on a US blacklist prohibiting it from sourcing US technology, Arm temporarily halted sales to the Chinese company but reversed that decision after a legal review determined that its technologies were of UK-origin.
Arm’s chip design tools are pervasive in the global semiconductor industry, with more than 1,000 customers around the world having shipped more than 180 billion chips to date, according to the company.
Speaking to concerns over the deal’s potential impact on Arm’s role as an independent supplier of core technology, Huang said Nvidia has every intention of protecting and growing Arm’s licencing business model, which took three decades to realise.
“One of the things I really value about Arm is the network of partners and its ability to take what is very difficult to design and turn it into soft IP design that people could use,” he said.
More from South China Morning Post:
- Beijing likely to reject Arm-Nvidia deal over US fears, says former Lenovo chief engineer
- Re-Arm-ed: Nvidia’s move on UK chip giant sets up US-China tech war showdown