As EU and US authorities are trying to protect their most valued assets from Chinese money, China made what could be a goodwill gesture: The country’s antitrust regulator approved the acquisition of Israeli Mellanox Technologies by California-based Nvidia for $6.9 billion. The deal is expected to boost Nvidia’s edge in artificial intelligence computing.

Why it matters: China’s green light comes at a time of heightened tensions between Beijing and the Western world. Analysts speculate that there could be multiple reasons behind the approval: an attempt to defuse tensions, a sign that China doesn’t plan to fight every single battle, or that they simply don’t care.

  • The powers of the Committee on Foreign Investment in the United States (CFIUS) were expanded on Feb. 13, 2020. The committee can now block deals of non-controlling interests.
  • EU lawmakers are looking to expand the bloc’s and member-states’ power to scrutinize and block Chinese investments. The EU’s competition chief encouraged EU governments to buy shares of tech companies they deem strategically important.

Details: The Mellanox deal was announced in March 2019 and was first cleared by US and EU authorities.

  • Chinese law requires that the State Administration for Market Regulation (SAMR) approves mergers or acquisitions between companies with combined sales over $56 million in China and $282 million globally.
  • The companies had to refile their application with China’s antitrust regulator because it expired.
  • Competition in the graphics processing units market is heating up, with AMD and Intel closing in on Nvidia’s market share.
  • The chipmaker has made strides in AI, catering to the needs of big tech like Alibaba and Microsoft with deep learning chips.
  • Mellanox is a leader in low-latency, high-bandwidth interconnect solutions.
  • The Mellanox acquisition gives Nvidia the potential of a world-leading stack of solutions in deep learning and big data analytics.

Context: The Imagination Technologies boardroom takeover that never took place has caused a stir in US and European circles. The UK chipmaker’s CEO, CPO and CTO resigned, unconvinced that the company was safe from a takeover.

  • The SMRA blocked Qualcomm’s $44 billion acquisition of NXP Semiconductors in July. The US had lifted sanctions on telco vendor ZTE just a few weeks before.
  • Mellanox is Nvidia’s biggest-ever spending on an acquisition. In 2011, Nvidia acquired Icera for $267 million, a spokesperson for the GPU maker told the Wall Street Journal.

Eliza Gkritsi

Eliza is TechNode's blockchain and fintech reporter. When she isn't obsessing over the rise of distributed ledger technology in China, she helps with editing.