Nvidia Corp’s (NASDAQ:NVDA) $40 Billion Acquisition Arm Deal Faces Resistance From Chinese Firms

Nvidia Corp’s (NASDAQ:NVDA) proposed acquisition of British chip designer Arm faces curbs from Chinese firms, including Huawei Technologies. The firms have expressed concerns to regulators about the deal, arguing that the US tech company may force Arm to cut off Chinese firms.

Chinese tech firms concerned about Nvidia takeover of Arm

The $40 billion deal could be in jeopardy as influential tech firms have been pushing the State Administration for Market Regulation to reject the deal. Alternatively, they want regulators to impose conditions ensuring Chinese firms will continue accessing Arm technology post the transaction. According to people familiar with the matter, private deliberations about the deal as concerns grow on the influence Nvidia will have over Arm.

There are concerns that Arm will become a pawn in the tech supremacy battle between China and the US. The British company’s chip designs and architecture are very important in the manufacture of smartphones and supercomputers. Nvidia is acquiring Arm from SoftBank Group Corp and will bring it under US jurisdiction. This will thus threaten the semiconductor designer’s status as a neutral party in the chip-making industry.

China is the largest semiconductor market globally

A review of the transaction in China will be centered on the perception that the US is attempting to contain Chinese tech companies’ progress. China has the power of approving the deal, considering it is the largest semiconductor market globally. Every year over $300 billion worth of chips is imported to China. China’s foreign dependence on chips could convince regulators to pressure major concessions from the US tech company to preserve the relationship with Arm. This could be through keeping the business separate and independent.

Bloomberg Intelligence analysts Anthea Lai said there is a likelihood China won’t make it easy to allow Nvidia to takeover Arm. This is because this is likely to worsen Huawei’s success in accessing the British company’s semiconductor design. Arm chips are important in a number of Huawei products, which include Kunpeng server chips, Kirin smartphone processors.