22:53 GMT04 March 2021
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    The UK Competition and Markets Authority and officials in Brussels are set to launch an antitrust probe into one of the largest tech mergers in history, with Chinese firms and regulators potentially blocking the deal by lobbying to state authorities, a report found on Thursday.

    The United Kingdom and European Union will launch investigations into US tech giant Nvidia's $40bn takeover of British chip designer Arm, the Financial Times reported on Thursday.

    The news comes after media reported Beijing may block the deal, citing concerns US tech companies could block access to key technologies in the global tech market.

    According to FT, officials in London and Brussels urged scrutiny of the deal due to Arm's massive influence in Apple, Qualcomm, Samsung, Broadcom as well as across most smartphones in the global tech market.

    “This deal will be thoroughly investigated [ . . . ] and scrutiny may lead all the way to a prohibition,” a source familiar with the matter said as quoted by FT.

    The news comes after the deal was announced in September amid criticisms from Beijing and rival chipmakers. Japanese holding company Softbank expected the deal to be completed in 18 months amid the regulatory concerns, FT added.

    “I can unequivocally state that Nvidia will maintain Arm’s open licensing model. We have no intention to ‘throttle’ or ‘deny’ Arm’s supply to any customer,” Janen Huang, Nvidia's chief executive said in a letter to FT, rejecting the claims.

    An Nvidia spokesperson added the deal would be "great for innovation and market competition".

    "We’re confident that the regulators will see the benefits to the tech ecosystem,” a statement from Nvidia read.

    But Nvidia's rivals include Huawei Technologies, who faced restrictions on key key technologies due to the Trump administration in May 2019. The Shenzhen-based firm and other mainland tech companies voiced concerns to Chinese regulators in October last year, citing concerns the chip designer may restrict access to its products.

    “The overarching worry is the loss of neutrality of Arm. At the moment the company is very neutral in its packages with its customers. But the worry is that in the medium and long term Nvidia will use Arm to disadvantage other companies and pump up its own technology,” a rival firm said as cited by FT.

    Oliver Dowden, UK secretary for Digital, Culture, Media and Sport, was also pressured to intervene in the matter, citing national security, FT added.

    The intervention follows a blanket ban on Huawei from building national 5G infrastructure in July last year, citing national security and supply line disruptions, in line with Trump's trade war.

    “There is a good chance of the deal being blocked because there is no real way to preserve neutrality. There will be irresistible economic incentives for Nvidia to combine elements with Arm. Otherwise, why are they paying $40bn?” a source added, citing fears regulators may fail to reign in Arm's neutrality.

    The news also comes after mainland chipmaker SMIC was placed on a Trump-era Entity List along with dozens of Chinese multinational tech companies, citing national security risks without providing evidence. According to sources, the Biden administration is not expected to shift from Trump's anti-China policy and may continue restricting access to mainland firms.

    Concerns over talks between US chipmaker AMD and Xilinx were also voiced, adding uncertainty to the $30bn merger.

    Beijing and numerous companies have vowed to decouple from foreign technologies, with the former pledging $1.4tn to building domestic emerging technologies, including artificial intelligence, 5G, green energy and infrastructure.

    Huawei, SMIC and numerous others plan to join a semiconductor standards authority to boost the nation's domestic chipmaking capabilities, following the massive investments to reduce dependence on US technologies.

    Related:

    Beijing Could Block Nvidia-Arm Deal Over Future US Trade War Restrictions - Ex-Lenovo Chief Engineer
    AMD in Advanced Talks for $30bn Xilinx Buyout as Nvidia's ARM Deal Uncertain in US-China Trade War
    Huawei to Join Forces With Chinese Tech Companies to Limit Nvidia-ARM Buyout Deal Amid US Trade War
    Huawei, SMIC to Join Chipmaking Standards Group as China Pushes Foreign Tech Decoupling in Trade War
    Tags:
    ARM, smartphones, tech, US-China trade war, Huawei, Nvidia, semiconductors, corporate merger, acquisition, European Union (EU), United Kingdom
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