By Reuters | Updated: 3 December 2021
The US Federal Trade Commission on Thursday sued to block US chip company Nvidia’s more than $80 billion (roughly Rs. 5,99,760 crore) planned acquisition of British chip technology provider Arm, adding to already significant global regulatory challenges of the deal.
The FTC said the proposed deal would give one of the largest chip companies control over computing technology and designs that competitors rely on to develop their own competing chips.
The deal has been widely expected to fall apart after facing opposition in the chip industry. British regulators said last month they would launch an in-depth probe of the deal, and it is also under scrutiny in the European Union.
Arm licenses its chip architecture and blueprints to major chipmakers Apple, Qualcomm, and Samsung, underpinning the global smartphone ecosystem. Arm was sold to Japan’s SoftBank in 2016.
Nvidia said it would “work to demonstrate that this transaction will benefit the industry and promote competition.”
Arm declined to comment.
The stock-heavy deal has more than doubled in value since it was announced in September 2020 as Nvidia shares have risen on the performance of its data centre business. Nvidia will owe only a $1.25 billion (roughly Rs. 9,370 crore) breakup fee if the deal does not close, and its shares closed up 2.2 percent at $321.26 (roughly Rs. 24,090) on Thursday.
“Nobody thinks the deal is going to close,” said Stacy Rasgon, an analyst with Bernstein. “The data centre story has been really playing out. The software narrative has become a bigger piece of the story. I would love to see this deal, but I don’t think they need it.”
Before Nvidia’s offer, SoftBank had planned to file for an initial public offering for Arm. While Arm’s revenue is growing briskly, rising 56.3 percent to $1.46 billion (roughly Rs. 10,945 crore) in the six months ended September 30, it is unclear whether Arm, in an IPO, would fetch anything close to the $80 billion (roughly Rs. 5,99,760 crore) in value offered by Nvidia.
That would be a new blow for the Japanese conglomerate whose Vision Fund assets sank by $10 billion (roughly Rs. 74,970 crore) last month, driven by plummeting valuations for investments in Chinese e-commerce firm Alibaba and ride-hailing service Didi Global.
The FTC, which is made up of two Republicans and two Democrats, voted 4-0 to approve the challenge to the planned merger.
‘Higher prices and less choice’
The FTC alleged “the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products.”
The FTC added the combined firm “would have the means and incentive to stifle innovative next-generation technologies, including those used to run datacentres and driver-assistance systems in cars.”
Some semiconductor firms such as MediaTek and Broadcom have voiced support for the deal. But other firms such as Qualcomm have opposed it over concerns that Nvidia would have a first look at key technologies that they depend on and could then have better insights into their future products.
Qualcomm did not immediately respond to a request for comment.
Nvidia’s chief executive, Jensen Huang, made a biting comment at an industry dinner last month, saying that Qualcomm Chief Executive Cristiano Amon, who recently took the helm of an industry trade group, had proven to be a master advocate in the battle over Arm. Qualcomm had its own extensive battles with global regulators, including the FTC, which Qualcomm prevailed over after the regulator brought an antitrust lawsuit against it.
“He’s the perfect person to advocate for our industry,” Huang said from a stage as Amon sat in the audience. “I was trying to figure out, how is it possible that Cristiano knew every single regulator on the planet, and by the time I got there to tell them about my story on Arm, he was already there advocating against it?” Huang said, to stunned laughter from the crowd.
The FTC said it has cooperated closely with staff of the competition agencies in the European Union, United Kingdom, Japan, and South Korea.
© Thomson Reuters 2021
AMD’s $35-Billion Deal for Xilinx Now Expected to Close in 2022
By Reuters | Updated: 31 December 2021
Chip company Advanced Micro Devices’s $35 billion (roughly Rs. 2,60,025 crore) all-stock deal for peer Xilinx is now expected to close in the first quarter of 2022, delayed from a previous target of end-2021, the companies said on Thursday.
“While we had previously expected that we would secure all approvals by the end of 2021, we have not yet completed the process,” the companies said in a statement.
Shares of AMD were marginally up in trading after the bell, while those of Xilinx fell 3.6 percent.
AMD announced the deal in October, intensifying its battle with chief rival Intel in the data center chip market.
Amid the US-China tensions, chip deals face approval challenges from Chinese regulators, who are known for their lengthy and sometimes opaque antitrust reviews.
“Our conversations with regulators continue to progress productively, and we expect to secure all required approvals,” the companies said.
Chip designing peer Nvidia has been struggling with getting regulatory approval for its deal for UK-based chip firm ARM, with the US Federal Trade Commission earlier this month suing to block the deal over competition concerns.
© Thomson Reuters 2021
SK Hynix Completes First Phase of $9-Billion Intel NAND Business Buy
By Reuters | Updated: 30 December 2021
South Korea’s SK Hynix said it had completed the first phase of its acquisition of Intel’s NAND flash memory chip business, after it received regulatory nods from eight countries including China.
In exchange, SK Hynix will pay $7 billion (roughly Rs. 52213.07 crore) out of the deal’s total $9 billion (roughly Rs. 67131.09 crore) price tag, the world’s second-largest memory chip maker said in a statement on Thursday.
The deal, signed in 2020, will allow Intel to focus on its smaller but more lucrative Optane memory business. For SK Hynix, it is the biggest acquisition ever as it seeks to boost its capacity to build NAND chips, used to store data in smartphones and data centre servers.
“This acquisition will present a paradigm shifting moment for SK Hynix’s NAND flash business to enter the global top tier level,” said Park Jung-ho, Vice Chairman and Co-CEO of SK Hynix.
A SK Hynix subsidiary called Solidigm, headquartered in San Jose, California, United States, will manage the newly acquired NAND solid-state drive (SSD) business.
SK Hynix co-CEO Lee Seok-hee will be appointed executive chairman of Solidigm, while Rob Crooke, former senior vice president of Intel, will be appointed CEO of Solidigm, SK Hynix said in the statement.
The second phase of the deal is expected to close in or after March 2025 along with the payment of the remaining $2 billion (roughly Rs.14917.5 crore), and will include SK Hynix’s acquisition of Intel’s remaining assets in the NAND business including intellectual property and workforce, the statement added.
© Thomson Reuters 2021
Samsung, Micron Warn China’s Xian Lockdown Could Affect Memory Chip Manufacturing
By Reuters | Updated: 30 December 2021
Samsung Electronics and Micron Technology, two of the world’s largest memory chip makers, warned that a COVID-19 lockdown in the Chinese city of Xian could affect their chip manufacturing bases in the area.
Micron said on Wednesday the lockdown could lead to delays in the supply of its DRAM memory chips, which are widely used in data centres.
It said the stringent restrictions, which went into effect earlier this month, may be increasingly difficult to mitigate and had resulted in thinner staffing levels at its manufacturing site.
Samsung Electronics also said on Wednesday that it will temporarily adjust operations at its Xian manufacturing facilities for NAND flash memory chips, used for data storage in data centres, smartphones and other tech gadgets.
Chinese officials have imposed tough curbs on travel within and leaving Xian from December 23, in line with Beijing’s drive to immediately contain outbreaks as they appear.
“We are tapping our global supply chain, including our subcontractor partners, to help service our customers for these DRAM products,” Micron said in a blog post.
“We project that these efforts will allow us to meet most of our customer demand, however there may be some near-term delays as we activate our network,” the company said.
Micron added that it was working to minimize the risk of virus transmission and had employed measures including physical distancing and on-site testing and was encouraging vaccination.
Samsung has two production lines in Xian making advanced NAND Flash products, which account for 42.5 percent of its total NAND flash memory production capacity and 15.3 percent of the overall global output capacity, according to analysis provider TrendForce.
Seoul-based analysts said chips made in Samsung’s Xian NAND plant would mainly go to the China market with limited shipments to overseas destinations, and some of the biggest demand for the kind of chips made in the plant would come from Chinese server companies.
Samsung said in a late October earnings call that it had entered the July-September quarter with low inventory of NAND chips, and intended to normalise inventory level during that quarter. It is expected to announce October-December earnings results in January.
India Outlines $10-Billion Plan to Woo Global Chip Makers
By Reuters | Updated: 16 December 2021
India has approved a $10 billion (roughly Rs. 76,090 crore) incentive plan to attract semiconductor and display manufacturers, technology minister Ashwini Vaishnaw said on Wednesday, as part of a deepening push to establish the country as a global electronics production hub.
Under the plan, the government will extend fiscal support of up to 50% of a project’s cost to eligible display and semiconductor fabricators, the government said in a statement.
Israel’s Tower Semiconductor, Taiwan’s Foxconn and a consortium from Singapore have shown interest in setting up chip factories in India while Vedanta Group was keen to set up a display plant, a government source told Reuters.
“The program will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design,” the government statement said.
The drive comes as some companies look to diversify their manufacturing bases beyond China due to the ongoing trade war between Washington and Beijing and is a sign India is trying to move up the electronics value chain.
The government’s plan to incentivize semiconductor manufacturing also comes at a time when automakers and tech companies around the world are grappling with a global chip shortage. The government also approved an incentive plan to support 100 local firms working on integrated circuit and chipset designs.
Technology Minister Ashwini Vaishnaw told a news briefing the plan would help develop “the complete semiconductor ecosystem – from the design of semiconductor chips to their fabrication, packing and testing in the country”.
The government said it expected the scheme to create about 35,000 high-quality positions, 100,000 indirect jobs and attract investment worth Rs. 1,67,000 crore.
Prime Minister Narendra Modi’s government has offered about $30 billion (roughly Rs. 2,28,280 crore) in incentives to woo some of the world’s largest electronics manufacturers to set up shop in India and give the domestic industry a fillip.
The push has already helped make India the world’s second-biggest smartphone maker behind China.
It has also helped India win investment commitments from Foxconn, Wistron and Pegatron – three of Apple’s top contract manufacturers.
“The government’s plan will help bring advanced technology, more employment and bigger investments into India,” said A Gururaj, managing director of Indian contract manufacturer Optiemus Electronics. “It will also help cut expensive tech imports.”
Tata Group, one of India’s biggest conglomerates, is venturing into the semiconductor business and is in talks with three states to invest up to $300 million (roughly Rs. 2,280 crore) to set up a chip assembly and test unit, Reuters reported last month.
© Thomson Reuters 2021
US Said to Consider Banning Key Exports to Chinese Chipmaker SMIC
By Reuters | Updated: 11 December 2021
US officials are considering discussing a Defence Department proposal this month to close regulatory loopholes that have allowed Chinese chipmaker SMIC to buy critical US technology, the Wall Street Journal reported on Thursday.
Some Commerce Department officials are trying to block the Defence Department’s proposal, the Journal added, citing people familiar with the matter.
Semiconductor Manufacturing International Corporation (SMIC) was added to a US blacklist last year that denies it access to advanced manufacturing equipment from US suppliers due to its alleged ties to China’s military, claims that the company rejects.
SMIC, China’s largest contract chipmaker, did not immediately respond to a request for comment on the report.
In the coming months, US officials are also considering adding more Chinese technology companies to the Commerce Department’s entity list and to the Treasury list banning US investment, the Journal added.
On Wednesday, the US House of Representatives passed legislation to ban imports from China’s Xinjiang region over concerns about forced labour.
© Thomson Reuters 2021
Original Apple Computer Built by Steve Jobs and Steve Wozniak to Be Auctioned
By Agence France-Presse | Updated: 9 November 2021
An original Apple computer, hand-built by company founders Steve Jobs and Steve Wozniak 45 years ago, goes under the hammer in the United States on Tuesday.
The functioning Apple-1, the great-great-grandfather of today’s sleek chrome-and-glass Macbooks, is expected to fetch up to $600,000 (roughly Rs. 4.44 crore) at an auction in California.
The so-called “Chaffey College” Apple-1 is one of only 200 made by Jobs and Wozniak at the very start of the company’s odyssey from garage start-up to megalith worth $2 trillion (roughly Rs. 1,48,09,546 crore).
What makes it even rarer is the fact the computer is encased in koa wood — a richly patinated wood native to Hawaii. Only a handful of the original 200 were made in this way.
Jobs and Wozniak mostly sold Apple-1s as component parts. One computer shop that took a delivery of around 50 units decided to encase some of them in wood, the auction house said.
“This is kind of the holy grail for vintage electronics and computer tech collectors,” Apple-1 expert Corey Cohen told the Los Angeles Times. “That really makes it exciting for a lot of people.”
Auction house John Moran Auctioneers says the device, which comes with a 1986 Panasonic video monitor, has only ever had two owners.
“It was originally purchased by an electronics professor at Chaffey College in Rancho Cucamonga, California, who then sold it to his student in 1977,” a listing on the auction house’s website says.
The Los Angeles Times reported the student — who has not been named — paid just $650 (roughly Rs. 48,100) for it at the time.
That student now stands to make a pretty penny: a working Apple-1 that came to the market in 2014 was sold by Bonhams for more than $900,000 (roughly Rs. 6.66 crore).
“A lot of people just want to know what kind of a person collects Apple-1 computers and it’s not just people in the tech industry,” Cohen said.
Apple raced to success in the late 1970s and early 1980s, but foundered after the departure of Jobs and Wozniak.
The company was reinvigorated in the late 1990s, and Jobs was brought back into the fold as the chief executive.
He oversaw the launch of the iPod, and later the world-changing iPhone, before his death in 2011.
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