China is emerging as a potential stumbling block to the controversial $ 40 billion (£ 31 billion) sale of the UK’s largest tech company, Arm Holdings, as the UK government hesitates to intervene in the ‘agreement.
Labor, unions and Arm’s co-founder urged ministers to either block the sale of the chip designer by Japanese investment firm SoftBank to US firm Nvidia or insist on legally binding conditions to guarantee that British interests are not prejudiced.
While the government has so far refused to commit to the deal, a Chinese state-backed outlet has indicated that Beijing may be willing to do so.
An editorial in the state-backed Global Times Wednesday said the takeover was “disturbing” and called on global regulators to be cautious when considering passing it.
“Given the US-China tensions and the US crackdown on a range of Chinese tech companies, if Arm falls into US hands, Chinese tech companies would certainly be at a disadvantage in the market,” the editorial said.
While UK skeptics of the deal have raised concerns that Nvidia could cut jobs or siphon valuable intellectual property from Cambridge-based Arm out of the UK, the Global Times editorial s ‘is focused on the future of Chinese access to Arm’s technology, which is almost ubiquitous in modern smartphones.
If Arm belonged to the United States, President Trump – who has previously shown hostility to Chinese companies such as Huawei and TikTok – could roll out Cfius regulations, which give the White House powers over exports.
The Global Times said if the sale goes through, Chinese companies could be barred from using Arm-based chips, while European companies that use its technology could also have difficulty supplying China.
Another potential hurdle emerging from China is a dispute involving the managing director of Arm’s subsidiary in China, a country that accounts for 20% of its revenue.
Arm is embroiled in an impasse with Allen Wu, the general manager of Arm China. Wu refused to step aside amid allegations of misconduct. He has not publicly commented on the allegations.
In June, Arm and his Arm China partner, Hopu Investments, attempted to fire Wu after discovering what they considered to be serious irregularities in his conduct.
They said they included a failure to disclose conflicts of interest and employee manual violations.
Arm China issued statements saying that Wu continued to be its general manager and that its operations were continuing as normal. He also denied Arm’s allegations against Wu.
Arm declined to comment on Wednesday.