ARM now licences Chinese companies through a Chinese joint venture in which ARM owns a minority stake. What is more there have been unresolved board-level disputes about who is in charge of the joint venture. It is not clear whether this is rogue activity by a lone executive, or a small group of executives, or a state-sponsored power play for control (see ARM's China boss has hired security to exclude executives). But the combination of events has disrupted ARM's control of about one third of its business.
It is notable that major IP providers, Imagination Technologies, MIPS and ARM are all being leveraged in China (see Opinion: China has had its way with Imagination and China takes control of MIPS – via Samoa). Certainly, the situation in China should have given Huang pause for thought and reason to down-rate any offer – and perhaps he did.
But with an increasingly hostile US, the prospect of the ownership of ARM moving to the United States is unlikely to appeal to China who may well see it as lessening its access to ARM technology. I predict China will stall and generally interfere with this deal.
UK and European regulators may have also something to say about the deal and make their own demands for changes or additional terms. While the UK government may have already been fobbed off with the promise of a supercomputer, there is an increasing awareness of strategic regional issues within the European Union.
The fact that the boards of directors of all three companies have signed up to this deal makes it harder to prevent because opponents do not have actors on the ground to press for alternative solutions. However withholding permission and waiting it out until circumstances change is one way for regions to rattle their sabres.
Related links and articles:
ARM news articles:
- Sale to Nvidia agreed at $40 billion
- Qualcomm raises bid for NXP to $44 billion
- Samsung wants consortium, not Nvidia, as buyer
- China boss has hired security to exclude executives
- Opinion: Trouble in China was waiting to happen
- Opinion: China has had its way with Imagination
- China takes control of MIPS – via Samoa