Event: NVIDIA announced the termination of its acquisition of arm from Softbank. On the afternoon of February 8, Softbank, NVIDIA and arm officially issued a statement announcing the termination of the previous acquisition of arm by NVIDIA from Softbank. Softbank stated that the completion of the transaction was hampered by major regulatory challenges. According to the agreement between NVIDIA and Softbank, Softbank will retain the $1.25 billion deposit previously paid by NVIDIA, which will be included in the fourth quarter profit, and NVIDIA will retain the arm license for 20 years.
Reason for failure: the acquisition has a wide range of influence and has attracted extensive attention from both government and enterprise circles. 1) Most of arm’s customers are NVIDIA’s competitors. Although NVIDIA promises that its acquisition will not change arm’s openness and neutrality and will still serve all arm customers equally, as arm’s customers, giants such as Qualcomm, Google and Microsoft are bound to have doubts about this, and companies such as Qualcomm and Microsoft have also expressed their concerns about the acquisition to the regulatory authorities. 2) The antitrust authorities of various countries have conducted strict reviews, and no regulatory authorities have approved the acquisition. According to the laws of various countries and regions, NVIDIA’s acquisition of arm requires the consent of the regulatory authorities in the UK, China, the European Union and the United States. As of the failure of the transaction announced by both parties, no regulatory authorities have approved the transaction.
Impact: slow down the pace of oligopoly and avoid the direct control of arm ecology by the United States.
1) the geopolitical situation is complex, and arm is not classified as an American company, which is good for the development of China’s semiconductor. The United States continues to restrict the United States and enterprises using American equipment or technology from exporting products or services to semiconductors in the entity list by adding Chinese enterprises to the entity list. At present, Chinese enterprises such as Huawei are restricted in terms of streaming. Once arm is incorporated into American companies, IP authorization is also restricted, which will also cause a devastating blow to IC design business.
2) the emergence of a monopoly company is prevented, and the competition of semiconductor companies is still close. When NVIDIA is wholly-owned, arm is afraid that it is difficult to maintain its original neutrality and be impartial to the competition of shareholders and other competitors.
3) the combination of arm and GPU giants failed, leaving market opportunities for the industrialization of other architectures. At present, the mainstream CPU architecture in the world includes risc-v architecture based on reduced instruction set in addition to x86 and arm, which occupy most of the market. NVIDIA’s acquisition of arm failed. Under the background of Sino US friction, it retained the soil for the survival of China’s risc-v track companies and reserved certain market opportunities for the promotion of China’s risc-v industrialization.
The era of semiconductor de globalization has begun. Despite the failure of this acquisition, the recent introduction of a series of bills such as the US competition act 2022, as well as the early return of manufacturing industries in various countries and the relevant policies of EU industry 5.0, all indicate that the era of semiconductor de globalization has come. For the needs of national security and industrial security, China is bound to step up the layout of semiconductor upstream and downstream industries, In the future, key core and weak links such as high-performance computing will still receive the greatest attention and financial support.
Investment suggestions:
It is good for high-performance computing chips. It is recommended to pay attention to Guoxin technology, Changsha Jingjia Microelectronics Co.Ltd(300474) , Shanghai Fudan Microelectronics Group Co.Ltd(688385) , Shanghai Anlogic Infotech Co.Ltd(688107) , Cambricon Technologies Corporation Limited(688256) , Rockchip Electronics Co.Ltd(603893) , Allwinnertech Technology Co.Ltd(300458) , Gigadevice Semiconductor (Beijing) Inc(603986) .
Risk tips:
The research and development of high-performance computing chip is difficult and less than expected.
