Nvidia’s $40 billion purchase of Arm could well bring the chip designer under US trade restrictions, but that won’t necessarily undermine its business (NVDA)

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Simon Segars Jensen Huang

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As one of its cofounders has warned, chip designer Arm could find its technology subject to greater scrutiny and restrictions by US authorities if its planned sale to Nvidia for $40 billion in cash and stock goes through, international trade experts told Business Insider.

But as a matter of practice, Arm likely wouldn’t find the new restrictions any more confining than what it faces today, they said. Even though it’s presently owned by Japan-based SoftBank, not Silicon Valley’s Nvidia, Arm likely already has enough of a presence in and connection to the US to fall under the restrictions that could most meaningfully constrict its business, the trade experts said.

In terms of being subject to US trade restrictions, “in practical business terms, for the way that they were conducting operations already, that ship has sailed,” said Amy Deen Westbrook, a professor of international and commercial law at Washburn University School of Law.

Since Nvidia and current Arm owner SoftBank announced the deal Sunday, Arm cofounder Hermann Hauser has argued against it, warning in part that as a result of the acquisition, Arm and its customers in the UK would be subject to US export controls and sanctions on particular countries. The result would be that “the decision about who Arm is allowed to sell to will be made in the White House and not in Downing Street,” Hauser said in an open letter opposing the deal.

In his letter, Hauser specifically raised the alarm that a purchase by Nvidia would put Arm and its customers under the control of “US OFAC,” or the Office of Foreign Assets Control, a branch of the US Treasury Department. Trade experts said he’s not wrong.

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Two US agencies oversee trade restrictions

OFAC is one of two agencies through which the US government imposes trade restrictions and export controls, said Larry Ward, a partner at law firm Dorsey & Whitney and a member of its national security law practice group. The Treasury Department agency oversees sanctions against particular countries, such as Cuba and Iran, and against certain individuals, such as those accused of assisting Russia’s invasion and occupation of Ukraine’s Crimea region. OFAC’s sanctions limit the ability of US companies to do business in particular countries and its restrictions typically apply to the corporations’ foreign subsidiaries, Ward said.

The other primary agency involved in trade restrictions is the Commerce Department’s Bureau of Industry and Security, or BIS, which administers export controls on particular products. The BIS is charged with protecting national security by prohibiting or limiting countries or companies within those countries from accessing particular US products or technologies, such as computers or nuclear materials.

The prohibition on the sale of certain technology products to Huawei is being overseen by BIS. Unlike OFAC sanctions, BIS export restrictions don’t automatically cover products or technologies developed by the foreign subsidiaries of US companies, Ward said. Instead, there’s a calculation done about whether something is a US product or not based on the amount of contribution to it by US individuals …read more

Source:: Business Insider

      

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