26-08-2021 | | By [Robin Mitchell](/author/robin_mitchell) As Nvidia continues to pursue its acquisition of ARM, Chinese regulators are now deciding if the deal can go through. What challenges does China face surrounding ARM, how could such a deal negatively impact China, and what will China do? For the past two years, China has repeatedly been in the news regarding technological espionage, hacking, spying, and IP theft. While past governments have generally turned a blind eye to the developing nation, the Trump administration decided to engage in a trade war with China in retaliation for its non-competitive behaviour. Tit for tat, each side placed import tariffs on essential products from the other side to try and economically cripple the other. However, the US took this a step further and decided to ban cutting-edge technology sales to China, including semiconductor manufacturing equipment , AI software, and high-end semiconductors. While China announced that it would do the same with its own AI technology, this has had almost no effect on the west (if at all). The US further attacked China by banning all Chinese hardware on critical infrastructure systems, including 5G networks. While the US position on China is clear, one major piece of technology that China relies on is under the control of the British; ARM. Some devices produced by Qualcomm are currently not allowed to be shipped to China due to export controls, but the ARM processor can indeed be licensed and used by Chinese manufacturers. The US can pressure the UK to prevent China from accessing ARM cores, but this is unlikely to happen. Since September 2020, the electronics world has eagerly watched Nvidia when they announced their plan to acquire ARM. This news was not met with positive support messages but with anger and fear from users, engineers, and companies alike. Such fear is perfectly understandable and valid when considering how ARM is the Switzerland of semiconductors by remaining neutral on any and all industrial forces. In other words, ARM is a processor architecture available to all customers regardless of their use or situation. From an engineering perspective, the Nvidia takeover of ARM presents challenges as Nvidia could easily manipulate and steer future platform developments favouring Nvidia. From a business perspective, this advantage would give Nvidia an unfair advantage in the market, especially when considering how widely ARM is integrated. Furthermore, Nvidia could design future ARM devices to work best with Nvidia products meaning that competitor products (such as an AMD GPU) may not be able to take full advantage of the core. However, any worries that China would have to surround the Nvidia-ARM acquisition would most likely centre around US control. Nvidia is an American corporation, and while ARM itself is British, the acquisition would turn ARM into an American company, making it liable to US law. Considering how dependent the Chinese market is on ARM (the major component in Huawei products), if ARM was under the control of the US, then a single export ban could cripple a considerable portion of the Chinese electronics market. While China is trying to fight against this dependency with the development of RISC processors and their own software platforms (such as Harmony OS), these are still years away from replacing ARM technology. Some may wonder why China even has a say in the acquisition, and the answer to this question is that China has a direct link with ARM through the subsidiary ARM China. ARM China has appeared in Electropages before. Its old CEO, Allen Wu, refused to give up his position after being fired and even ordered security to prevent anyone else from entering the primary office. Considering how vulnerable the Chinese electronics industry is to an ARM export ban, it is most likely that China will step in and prevent the sale from taking over. However, the Chinese government takes extended periods to decide (often around two years). This could bide them time to stock up on devices while also continuing their development of RISC-V processors . It should be understood that unlike companies in many other countries , there is no real distinction between the Chinese government and companies that operate in China. With a deep desire to control and monitor both their own population and those in other countries, it makes sense for China to want to develop their own processors and operating systems for devices. As such, the Chinese government will do everything in its power to help Chinese companies such as Huawei and Xiaomi not only succeed but get their devices to as many customers as possible. Thus, China’s decision in the Nvidia-ARM acquisition is more than just the effect on Chinese profit in companies; it will consider China’s more significant goals as a nation.