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Message: <blockquote data-quote="al97" data-source="post: 151658" data-attributes="member: 29424">22 Oct - Commercial Awareness - Tech Topic: How US Export Control on Chips Hindered the $69bn Broadcom-VMware deal<a href="https://www.ft.com/content/b23d2a9f-d873-43e4-9032-632d4e9d438c" target="_blank">https://www.ft.com/content/b23d2a9f-d873-43e4-9032-632d4e9d438c</a>The Export Control restricted Chinese chip growth in three different ways <ul> <li data-xf-list-type="ul">One, only outdated chips made fell within the permitted grade. </li> <li data-xf-list-type="ul">Two, chips that have already been tailor-made for Chinese companies cannot be shipped. </li> <li data-xf-list-type="ul">Three, US companies cannot ship to China or even their subsidiaries in the states. </li> </ul>US chipmaker Broadcom’s acquisition of cloud software VM was made in May 2022<ul> <li data-xf-list-type="ul">⅓ of Broadcom’s $33bn billion last year came from shipment to China </li> <li data-xf-list-type="ul">Beijing is likely to delay or block the transaction now that US tightened the export control. </li> <li data-xf-list-type="ul">Shares price of VM dropped about 9%, Broadcom 2%</li> <li data-xf-list-type="ul">Chinese M&A regulatory process now involves another layer of review that involves consultations with the Ministry of Foreign Affairs</li> <li data-xf-list-type="ul">In other words, Broadcom catches itself at the worst timing amidst export control war between Beijing and Washington</li> </ul>Whereas in China…<ul> <li data-xf-list-type="ul">It was explored in my last article that China tightened control on graphite to dampen the West’s energy sector. </li> <li data-xf-list-type="ul">More actions include the raid of Bain and Mitz offices, banned purchase of chips from US chipmaker, Micron. </li> <li data-xf-list-type="ul">Other deals include: </li> <li data-xf-list-type="ul">In 2018, Broadcom bid for Qualcomm at $142bn, which was blocked by Trump, for national security concerns, despite Broadcom being an SG company at the time. Since then, Broadcom relocated to the US and is headquartered there. </li> <li data-xf-list-type="ul">Intel called off its $5.4bn acquisition of Israel-based Tower Semiconductor after failing to secure regulatory approval from China</li> </ul>This additional information can be totally wrong, so it really is me throwing a prompt here inviting more comments: While I’m not an expert on chips, I did have a brief read on the book “Chips Act”, where the science behind chip manufacturing is briefly discussed. I vaguely remember an explanation on why it is difficult to catch up to chip technology because of something called “Moore’s Law”. If my understanding is correct, the law behind chip-making essentially creates a permanent gap between a chip factory that invents a new chip in say 2020 versus a chip that catches up later at 2023. The 3 year-gap cannot be closed due to Moore’s Law, which explains TSMC's unrivalled growth.</blockquote>

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