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Nvidia’s acquisition of ARM is expected to fail

Nvidia’s acquisition of ARM is expected to fail

The deal that Nvidia intended to finalize in 2021 has every chance of collapsing. At issue: the concerns about free access to the British company’s technologies that it raises in China, the European Union and even in the UK according to several analysts.

Strong opposition to the Nvidia / ARM deal from China and the United Kingdom

China is the major opposition. It will not approve the agreement between Nvidia and ARM as it stands. It could possibly approve the deal if the U.S. position towards China changes very significantly with the arrival of the Biden administration. An option that seems difficult to imagine. China has demonstrated its power to be a nuisance in these types of negotiations. The proposed takeover of the Dutch company NXP by the American company Qualcomm is a good example. The conclusion of this project required China’s blessing because of their presence in that country. Without ever saying yes or no, the latter turned the deal around simply by dragging things out until Qualcomm’s patience was exhausted and the project was eventually dropped. She could apply the same tactics to the Nvidia-MRA file. In the UK, the situation is no better for Nvidia. Intense lobbying has started to oppose the project. Hermann Hauser, one of the co-founders of ARM is one of the most virulent. He declared that the sale to the American chip manufacturer would be a “disaster for Cambridge, the UK and Europe” and would see the “last European technology company of any global importance sold to the Americans“. Europe, for its part, remains cautious and seems to hesitate to know who will eat it: China or the United States. The fact remains that we don’t all have the same point of view on this deal. Where we see a mega commercial operation and all the potential that could come with this takeover, the states see it as a US-led war operation.

Technological opportunity VS economic warfare

As Nvidia is a US company, the acquisition would transfer powers to the US administration, which could then impose export restrictions on the chips to protect national security interests and promote foreign policy objectives as seen with Huawei. Objectively, the tensions of recent years clearly suggest that one or more foreign regulators disapprove of Nvidia’s intention to acquire ARM. There seems to be no doubt about this for China. One could envisage a spectacular turnaround in relations between China and the United States, notably with an agreement opening the door to Nvidia in exchange for an easing of the constraints on Huawei. But at this moment it is unlikely.

SoftBank who loses wins?

Given the stakes and ARM’s strategic position, its owner SofBank could also benefit from the situation. The Japanese group could take ARM public. Given the climate, Softbank could even obtain a higher valuation than the envisaged deal. The era of supranational concentrations may be coming to an end. To those who see it as a brake on technology, I reply that I see it as an opportunity to revive the competition for innovation. An innovation that has often been put on the back burner to play Monopoly in recent years. The future will tell us where the balance will tip. As far as ARM and Nvidia are concerned, the year 2021 should gradually shed some light on the situation, probably leading to a conclusion in the second half of the year.

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Edited by Calliers

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