China is emerging as a potential stumbling block to the controversial $40bn (£31bn) sale of the UK’s largest technology firm, Arm Holdings, as the British government wavers on whether to intervene in the deal.
Labour, unions and Arm’s co-founder have urged ministers either to block the sale of the chip designer by the Japanese investment firm SoftBank to the US firm Nvidia, or insist upon legally binding conditions to ensure British interests are not harmed.
While the government has so far declined to wade into the deal, a Chinese state-backed outlet has indicated that Beijing might be minded to do so.
An editorial in the state-backed Global Times on Wednesday said the takeover was “disturbing” and called on global regulators to exercise caution as they considered whether to wave it through.
“Given the US-China tensions and US suppression on a range of Chinese technology enterprises, if Arm falls into US hands, Chinese technology companies would certainly be placed at a big disadvantage in the market,” the editorial said.
While UK sceptics of the deal have raised concern Nvidia might cut jobs, or siphon Cambridge-based Arm’s valuable intellectual property out of the UK, the editorial in the Global Times focused on the future of Chinese access to Arm’s technology, which is almost ubiquitous in modern smartphones.
If Arm were American-owned, President Trump – who has already displayed hostility towards Chinese firms such as Huawei and TikTok – could deploy Cfius regulations, which give the White House powers over exports.
The Global Times said that if the sale goes through, Chinese firms risked getting cut off from using Arm-based chips, while European companies that use its technology might also face difficulties supplying China.
Another potential obstacle emerging from China is a dispute involving the chief executive of Arm’s subsidiary in China, a country that accounts for 20% of its revenue.
Arm is involved in a standoff with Allen Wu, the chief executive of Arm China. Wu has refused to step down amid allegations of breaches of conduct. He has not commented publicly on the allegations.
In June, Arm and its partner in Arm China, Hopu Investments, tried to remove Wu after finding what they said were serious irregularities in his conduct.
They said they included failing to disclose conflicts of interest and violations of the employee handbook.
Arm China put out statements saying that Wu continued to be its chief executive and that its operations were carrying on as normal. It also denied Arm’s allegations against Wu.
Arm declined to comment on Wednesday.
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