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LONDON – The UK government launches a $ 40 billion Nvidia Corp. national security review to buy soft disk bank British designer SoftBank Group Corp., raising a new barrier to a proposal for industry reform that around the world face significant regulatory scrutiny. .
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British digital secretary Oliver Dowden on Monday used a little-used force to order the country’s antitrust agency to investigate the effects of the merger on national security and deliver a report by July 30. The secretary may finally approve the agreement, with or without conditions, or nix It.
The national security review is in addition to the agency’s previously announced plans to investigate the agreement on antitrust grounds.
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The UK inquiry is the latest example of how governments around the world are increasingly tightening control over semiconductor technology, after the past year showed how access to advanced microprocessors can make or break some of their biggest businesses.
U.S. export controls for chip technology have jeopardized the ability of China’s Huawei Technologies Co., which was briefly the world’s best smartphone maker, to buy supplies to keep making devices. A worldwide shortage of semiconductors, meanwhile, has caused the tire straps at General Motors Co and other automakers to turn because today’s vehicles need so many chips.
The UK government launches a $ 40 billion Nvidia Corp. national security review to buy SoftBank Group Corp.’s British disk designer Arm, which poses a new obstacle to a significant industry reform proposal regulatory investigation is confronted. (Reuters)
“It has become the new colonialism,” said Hermann Hauser, co-founder of Arm’s predecessor company and vice-chairman of an advisory board on European Union technology. “If you have sovereignty, you can run your economy independently without running to another country for semiconductors.”
In addition to the UK, Nvidia’s proposed acquisition of Arm is expected to come under scrutiny in China, the EU and the US, in part due to the potential to reform the chip sector. Nvidia is one of the world’s largest designers of graphics chips, while Arm designs the basic blueprints for chips in more than 95% of the world’s smartphones.
At the heart of antitrust concerns is the future of Arm’s business model, which has long relied on collaborating partnerships with as many businesses as possible to sell high-volume disk designs at low prices. Nvidia CEO Jensen Huang said he supported maintaining this open business model, but competitors were skeptical.
The UK has requested a review of the national security implications of Nvidia’s prospective acquisition of Arm, and the UK has used a rarely used force that gives it ample scope to determine whether the merger in the “” public interest “of the country would be based on national security grounds.
A Nvidia spokesman said he did not “believe this transaction poses significant national security issues”. He said the company would work with the British authorities on the investigation. Nvidia staff members said Nvidia executives were expecting a possible national security review in the UK when the company agreed to buy Arm and took into account the risk which he said was an 18-month timeline to complete the deal .
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Nvidia shares fell 3.3% in New York this afternoon.
The government did not order a national security review when SoftBank bought Japan for $ 32 billion in 2016. What has changed over the past five years is concerns about geopolitical risks, said Christine Phillips, a lawyer at the London firm Fishfisher, which specializes in crossings. border mergers.
“There is just a general sensitivity to protecting nuclear technology and assets that could be critical in the UK,” she said. Phillips said. She said the British government had in previous searches sought “public interest” assurances about the headquarters and jobs remaining in the UK.
Me. Phillips said concerns about foreign takeovers of technology companies had prompted the UK and European countries to prepare new legislation to create their own versions of Washington’s foreign investment committee in the US. In 2018, Cfius Broadcom Inc. rejected a $ 117 billion takeover bid. from another disk giant, Qualcomm Inc.
Similar concerns about digital sovereignty have prompted President Biden to propose spending $ 50 billion on the US chip industry. China is making efforts to boost its semiconductor sector, and the EU is spending part of a $ 150 billion package aimed at doubling its share of the global chip market by 2030.
Last month in Italy, Prime Minister Mario Draghi used a dark force, known as a gold stock, to prevent Shenzhen Invenland in China from buying 70% of a little-known company near Milan called LPE, a semiconductor company that larger European chip companies.
“It seems to me common sense to use the golden share in a situation like this,” he said. Draghi said earlier this month. “The scarcity of semiconductors has forced many automakers to slow down production last year. It has become a strategic sector, like others.”
Invenland and LPE did not respond to requests for comment.
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Today’s cars use a dozen or more sophisticated computer chips. These chips are largely manufactured in the US or Asia, giving European governments little control over the supply chains on which their car manufacturers rely. Volkswagen AG said last month that the scarcity of semiconductors has caused it to produce 100,000 fewer cars.
“It has made people, especially Brussels, realize that we have a problem here,” said Neil Campling, a London analyst at Mirabaud Securities. “We realized there are a lot of areas in the supply chain where we run the risk, and ultimately we are not in control.”