Nvidia is asking Chinese regulators to approve the $ 40 billion deal

Nvidia has submitted a request to Chinese competition regulators to reconsider a $ 40 billion purchase from British chip designer Arm, according to people familiar with the matter, about eight months after the deal was announced.

The application, which people said has been made in recent weeks, puts in place a scrutiny period that could last between a year and 18 months, according to Chinese antitrust lawyers.

That exceeded the 18-month timeline set by Nvidia when it was unveiled the deal last September.

China is a huge market for Arm, which licenses its energy-efficient concepts with a local joint venture. Its sales in the country, which two people familiar with the company made about $ 500 million in 2019, give Chinese regulators right to review the purchase.

Jensen Huang, chief executive of Nvidia, said in an interview with the Financial Times last month that the American chip company had “initiated the process” of engaging with Chinese regulators. He said he was confident the deal would be released on the terms set by Nvidia.

He referred to Nvidia’s acquisition of the Israeli company Mellanox, which was announced in 2019, in which Chinese regulatory approval was the last step in a 13-month process. “China usually comes after all the other regulators… This is consistent with the last experience I had,” he said.

Nvidia added that the “regulatory process is confidential and we cannot comment on its progress.”

Many people familiar with the thinking of China’s antitrust regulators have said that the country’s chipmakers, such as Huawei’s HiSilicon and Semiconductor Manufacturing International Corporation, as well as the chip investment group supported by the state E-Town Capital had opposesand the deal.

His worries arise afraid to give greater control of the designs that supported a large portion of China’s US-based Nvidia chip industry.

But Huang said a union between Arm and Nvidia “will only bring more innovation to the market” and that he is confident the deal will be closed.

Arm is fighting a long-term battle for control of her business in China, after she and her colleagues failed to oust the head of her joint venture, Allen Wu.

Wu remains in legal control of the business and negotiations for its exit have yet to produce results.

Wu brought proceedings against Arm China last summer in the southern city of Shenzhen, where the joint venture is registered and where it was supported by some members of the local government, according to several people familiar with the situation.

The lawsuit, filed by two Arm China shareholders under Wu’s control, said the hunting council’s decision was invalid. Wu was allowed to represent both Arm China and the two shareholders in the case, making him both plaintiff and defendant.

“He’s basically getting into trouble for himself,” said one person close to the matter. “One of his law firms may claim that the dismissal decision was invalid and the other law firm may accept it.”

The Shenzhen court has not yet held an official hearing for the case. People close to the Arm China council hope that the judges will eventually be able to install their representative as the accused, but so far they have not been successful.

Wu and Arm China did not respond to a request for comment.

More information from Qianer Liu in Shenzhen

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