Arm's CEO expects regulators to take a detailed take a look at the Nvidia deal


Simon Segars, Managing Director of ARM Holdings Plc,

Chris Ratcliffe | Bloomberg | Getty Images

Simon Segars, CEO of LONDON – Arm Holdings, told CNBC that he expected regulators to "take a close look at" the company's deal with US chipmaker Nvidia.

Nvidia announced on September 13th that it plans to buy the British chip designer from Japan's SoftBank for $ 40 billion. However, the acquisition has to overcome several hurdles.

"In many countries in the world official approvals have to be granted," said Segars on Tuesday evening. "It's a long process. There's a lot of interaction with regulators to provide the information we want."

When the deal was announced, Nvidia and Arm said they expected the deal to last 18 months. "We have been in this area for about two months now and we still expect it will take the remaining 16 months to complete the process," said Segars.

Headquartered in Cambridge, the company has a joint venture called Arm China with Chinese private equity firm Hopu Investments. Arm China is headquartered in Shanghai, which means the Chinese Ministry of Commerce and the Chinese State Administration for Market Regulation have the right to review the proposed Nvidia deal.

"Technically, Beijing can block the deal," Abishur Prakash, a geopolitical specialist at the Center for Innovating the Future, a Toronto-based consulting firm, told CNBC last month via email.

Local chipmakers in China, including Huawei, have urged Beijing to block the deal over fears that if Arm gets into the hands of a US company, they could be put at a disadvantage. Arm's energy efficient chip architectures are used in 95% of smartphones in the world and 95% of chips developed in China.

When asked if he was concerned about pressure from Chinese regulators, Segars said, "Regulators will generally be looking at this transaction closely as both Arm and Nvidia are very important in the world of technology."

"In terms of our ability to keep providing technology to companies around the world, that won't change with our acquisition by a US company," he added. "Export controls depend on where the technology was created in the first place. That won't change with Arm's ownership change."

To further complicate matters, Allen Wu, the executive director of Arm's China joint venture, was voted out of the company's board of directors in June after he reportedly launched a mutual fund in the Cayman Islands without their knowledge. However, he refused to leave.

According to a November 8 report in The Sunday Telegraph, Wu is now asking for a buy-out of stocks he manages up to $ 1 billion.

Arm & # 39; s co-founder Hermann Hauser has asked the British government to intervene in the takeover. "I think it's an absolute disaster for Cambridge, the UK and Europe," Hauser told the BBC in September.

Hauser said thousands of Arm employees in Cambridge, Manchester, Belfast and Warwick will lose their jobs if Nvidia "inevitably" decides to move Arm headquarters to the US and make the company a division of Nvidia.

He also believes Nvidia would "destroy" Arm's business model, which licenses chip designs to around 500 other companies, including several that compete directly with Nvidia.

Shadow business secretary Ed Miliband said in a statement shared with CNBC in September, "Poor is a major UK success story, but the government is doing nothing about the risk of the company being swallowed by Nvidia."

"If the government really believes in an active industrial policy, it cannot be right for it to ignore the potential consequences of this acquisition – including the potential impact on the company's headquarters and the thousands of UK jobs that depend on it."

The UK government is currently trying to get a new national security and investment law through parliament that would introduce a new regime for scrutiny of business transactions such as takeovers.

However, the government has not confirmed whether Nvidia's acquisition of Arm would be reviewed under the new law, should it pass.


Katherine Clark