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.