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The U.S. blocked Avista's acquisition of chip giant ARM, fearing it would hurt competition and neutrality

via:AI财经社     time:2021/12/4 16:04:51     readed:368

Wen | AI Financial News Agency Kang Jialin

Editing by | Yuyong

On December 2nd the US Federal Trade Commission (FTC) said in a statement that it would file an administrative lawsuit against RVI's acquisition of ARM, blocking the largest semiconductor industry acquisition in history.

In response, Yvida said it would continue to demonstrate the benefits of the ARM deal, "and we will continue to work hard to demonstrate that the deal will benefit the industry and promote competition." ”

Whether or not to harm competition becomes a regulatory priority

In September 2020, Ingweeda announced a $40 billion cash-and-share acquisition of ARM, its UK chip design subsidiary, from SoftBank.

ARM is a business model of the more special chip manufacturers, it does not produce and sell chips, the main profit model is through the design of instruction set architecture and related IP sold to integrated circuit design companies, charge licensing fees and royalties. Last year, Apple built the M1 series of chips based on ARM architecture, facing competition from Intel x86 architecture in the PC industry, allowing a range of semiconductor companies, including INVISTA and Qualcomm, to see arm's potential. In the field of mobile phones, ARM-based chips are commonly used in well-known smartphones on the market.

Nvitar is now the largest semiconductor company by market capitalisation in the United States, with a market capitalisation of more than $700 billion, spanning chip design, finished product sales, drive and software development, and after-sales. Under the dual benefits of the Metaverse and gaming industries, Yvida is one of the most promising technology giants in the capital market.

As a result, some technology companies have expressed concern about the biggest historic acquisition in chip history, arguing that ARM's core businesses will lose valuable neutrality and independence after the acquisition by Svista, including Google, Microsoft, Qualcomm, Huawei and SMIC, which have repeatedly objected to the deal's pros and cons for the semiconductor industry.

ARM itself is reluctant to be acquired. After learning of Nvida's intention to buy, ARM co-founder Hermann Hauser quickly published an open letter calling on the UK government to save ARM. In his letter, he said that if INVISTA buys ARM, it would be a catastrophic event for the industry as a whole, not only could ARM's UK jobs disappear, but it would also destroy ARM's business model.

Analyst Societe Generale has also commented that ARM's IP licensing model has always been "neutral" to global customers, and there is still uncertainty about whether it will remain globally neutral in the future.

The takeover has attracted close scrutiny from regulators after calls. An analyst at Chip Licensing told AI Finance that since ARM is headquartered in the UK and has operations in the US, EU, Japan and China. Acquisitions are expected to be difficult to proceed without the approval of the above jurisdictions.

In 2018, for example, Qualcomm announced it was abandoning its original $44 billion acquisition of NXP Semiconductors because China, one of the countries that had to approve the deal, refused to approve the deal, leading to a "miscarriage" of the deal. Prior to that, the acquisition has been approved by regulators in eight countries and regions, including the United States, the European Union, Japan, Russia and South Korea.

In fact, the U.S. procedural law on merger review empowers the FTC and the Justice Department's antitrust division to evaluate mergers and acquisitions, both of which have the power to challenge them. The FTC's argument is that the acquisition will allow RVI to control the computer technology and design needed by competitors to develop chips, and that if a deal is struck, the next generation of semiconductor technology, including the Internet of Things, risks being stifled, hurting competition in the semiconductor market.

The failure to buy had little impact on Yvida

In the face of opposition, Ingweeda has repeatedly stressed that the deal will benefit ARM itself and the chip industry, and that if the acquisition is completed, it will work to preserve ARM's open licensing model and ensure that its IP is available to all current and future interested licensees. In other words, Nvida will not block ARM shipments.

Foreign media reported that Ingweeda had submitted a request for review to Chinese regulators. China's antitrust laws require that if two companies are to be merged or acquired, each with global revenues of more than $10 billion, and each with revenues of more than $400 million in China, or each with combined revenues of more than $2 billion in China, each with revenues of at least $400 million in China, must be approved by China.

But as things stand, Nvitar has been unable to convince the US government at home, "Will China's Ministry of Commerce let go?" "The person is honest." But Invita is proud in capital markets, and the impact of the failure should be small. ”

At present, the market demand for Nvida GPU and data center AI chips can be said to be strong, the company's performance share price is flying, from 2015 onwards, by virtue of its advantages in the field of graphics processors, the company's share price in six years cumulatively increased by more than 7000 percent, in the "all-universe" and "meta-cosmos" under the dual-header, its market value is moving towards $800 billion.

It is reported that the deadline for the acquisition is September 2022, if the acquisition of Evida still failed to pass the parties to review, then a total of $1.25 billion in advance payments will be lost, leaving little time for Svista.

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