Nvidia-Arm deal: The biggest computer chip deal in history has fallen apart

At an initial value of $40 billion, the US chipmaker’s acquisition of British design firm ARM would have been the largest semiconductor deal on record.
But regulators around the world have long raised concerns about the deal, eventually leading to its collapse on Tuesday.

In a statement, SoftBank cited “significant regulatory challenges” that prevented it from completing the deal. It said that it would instead prepare ARM for a public offering within the fiscal year ending March 2023.

Under the terms of the agreement, SoftBank had already received a deposit of $1.25 billion during the signing. That payment was non-refundable, and “will be recognized as profit” in the Japanese conglomerate’s earnings for the quarter ending this March, it said.

FTC sues to block Nvidia's $40 billion takeover of Arm
The transaction was first announced in 2020, four years after SoftBank bought ARM for $32 billion, marking the largest foreign takeover by a Japanese firm at the time.

It was originally expected to close within 18 months, which would have been around this time. But it ran out of steam as it became a subject of global regulatory scrutiny, including from China and the United Kingdom.

In December, the US Federal Trade Commission sued to block the deal, saying it would stifle competition and give the combined company too much control over chip technology and designs. The European Commission also launched an investigation into the deal late last year.

The deal would have had to pass regulatory approvals from the United Kingdom, the European Union, the United States and China.

Had it gone through, it would have been the semiconductor industry’s biggest-ever deal, topping Avago’s acquisition of Broadcom in 2015, according to Dealogic.

— Rishi Iyengar contributed to this report.

North America’s biggest container port faces record backlog

“We have about two weeks’ worth of work sitting at anchor right now,” Seroka said in an interview with CNN’s Jake Tapper. “The question right now is how do we segment this cargo.”

Easing the backlog is crucial during the final months of the year because retail items are in high demand as holiday shopping begins to kick off, Seroka said. Automotive parts are also being prioritized because US auto manufacturers and many suppliers through the Midwest are waiting on components so they can build their final products.

“We had 25% of all cargo on our dock sitting here for 13 days or longer [and] that’s been cut in just about half over the last week,” Seroka said.

Five days ago, President Biden announced the Port of Los Angeles would move to a 24/7 operating schedule. While this has alleviated some of the congestion at the ports, Seroka said officials are not expecting to see the import market strengthen until February 2022.

“We’ve been buying more than ever as American consumers and the retailers have really tried their best to keep up with demand,” Seroka said. “The second quarter of next year is going to be focused on replenishing this inventory.”

Around the world, ports are congested as a result of the rapid rebound in demand for commodities and goods as much of the global economy has recovered from the pandemic. Shipping costs have soared, and companies wanting to move goods around are struggling because there just aren’t enough ships or containers available. All the while prices are going up for consumers.

– Anneken Tappe contributed to this report

Analysis: China is cracking down on data privacy. That’s terrible news for some of its biggest tech companies

Already, the company that elbowed Uber out of China has been kicked off app stores in the country and warned that it violated laws about data collection. The regulatory pressure has upended its first days as a publicly traded company in New York, with shares plummeting nearly 20% on Tuesday and retreating even more on Wednesday. All told, Didi has shed some $29 billion in market value from its peak.

Didi isn’t the only Chinese company now entering Beijing’s line of fire. Two other businesses that recently listed in New York — truck-hailing company Full Truck Alliance and job listing firm Kanzhun have been singled out by Chinese regulators as targets of a probe “to prevent national data security risks.” Their stocks have fallen 11% and 12%, respectively, this week.

The focus on Didi and other US-listed Chinese firms indicates that China’s tech crackdown has entered a “new stage,” according to Alex Capri, a Singapore-based research fellow at the Hinrich Foundation.

“Data has become increasingly strategic, particularly as more powerful AI, algorithms and machine learning, combined with state-sponsored cyber activities, become more pervasive,” he said, adding that as computing advances, the “massive treasure trove of data” held by large firms “will become evermore important to state actors.”

This phase of China’s tech crackdown is further defined by the ties these companies have to the United States. While Beijing’s anti-monopoly probes were concentrated on operations largely within China’s borders, it’s hard to ignore how much the government’s latest actions have focused on firms that sought foreign investment.

“China’s concerns over personal data are exacerbated when the data is at risk of being controlled by US interests,” said Brock Silvers, managing director at Hong Kong-based Kaiyuan Capital, who added that it was “no coincidence” that the three companies were investigated immediately after raising capital in the United States.

Full Truck Alliance and Kanzhun have both said they would cooperate with regulators and thoroughly review its cybersecurity practices.

A ‘zero tolerance’ approach

Chinese regulators began reining in tech firms late last year, when they shelved an IPO for Jack Ma’s Ant Group at the last minute over “major issues” with its listing. Since then, Beijing has investigated several companies, including Alibaba and Tencent (TCEHY), for alleged monopolistic behavior or breaches of customer rights. Alibaba (BABA), which Ma co-founded, was fined a record $2.8 billion in April, for example, while Ant Group was ordered to overhaul its operations.

The Didi probe suggests that regulators are now giving themselves an even broader mandate when it comes to curtailing Big Tech’s power.

On Sunday, the Cyberspace Administration — China’s top internet watchdog — accused Didi of “serious violations of laws and regulations” in its collection and use of personal information and banned Didi from app stores.

Leaders of the ruling Chinese Communist Party then escalated the data security campaign on Tuesday by pledging “zero tolerance” for illegal securities activity at home, and saying that they would more heavily regulate the ability of Chinese firms to list overseas.

The government said it would strictly regulate what kind of information those tech companies send and receive across the nation’s borders, and draft new rules about how to protect sensitive data related to overseas listings.

Growing concerns for data security

Concerns over data security in China — especially when the United States is involved — aren’t new, though they have been gaining traction in recent months.

Earlier this year, a popular annual consumer rights show in China sparked a national debate about privacy and surveillance and sent companies scrambling to stay on Beijing’s good side.
And Tesla (TSLA), the electric carmaker run by Elon Musk, has been rattled this year by data security allegations, which at one point pushed Musk to say publicly that his company’s cars would never be used for spying in China. Tesla later announced that it had set up a new facility in China to store local user data.

Chinese state media has also been stressing the need to focus on data security. The Global Times, a hawkish state-run tabloid, published commentary on Sunday urging Beijing to not allow internet companies “to become rule makers for the collection and use of personal information.”

“The standards must be in the hands of the state to ensure that the internet giants exercise caution in collecting personal information,” the commentary read, adding that China “must never let any internet giant become a super database of Chinese people’s personal information that contains even more details than the state, let alone giving them the right to use those data at will.”

Data protection is also stirring debate on social media in China, where many users are calling for tougher regulations on companies like Didi to safeguard their private data.

One widely circulated criticism of Didi stems from a 2015 research article, in which the company joined state-run Xinhua News Agency to detail travel behaviors about people coming in and out of 17 major government agencies. The data examined how many cars were entering or exiting different complexes, and used that information to draw conclusions about what kind of government actions could have sparked such activity.
“Using big data to analyze each government agency’ activities and travel? What about the military? Sensitive state departments?” one Weibo user asked Monday. “This absolutely concerns national security!”
Another user questioned the data collection practices of other Chinese companies, including food delivery giant Meituan and delivery and logistics firm SF Express.

“As long as you are using apps, there is almost no privacy,” the person said.

The risks of abandoning US influence

Tensions between Washington and Beijing have also heavily colored the latest round of China’s tech crackdown.

The two countries are still fighting over everything from tech and trade to allegations of human rights abuses in Xinjiang and Beijing’s control over Hong Kong. The United States late last year ratcheted up pressure on Chinese firms that trade in New York, and now requires them to regularly open their books to US accounting authorities or else risk being forced off stock exchanges.

“President [Xi Jinping’s] administration has been sending signals for some time that it would be driving toward becoming more self-reliant and less under the control of major trading partners like the United States,” said Doug Guthrie, a professor and director of China Initiatives at the Arizona State University.

Capri, of the Hinrich Foundation, expected Beijing to “try and limit [Didi’s] interactions with foreign players,” because of the company’s large share of US and Japanese investors.

According to Didi’s IPO prospectus, SoftBank (SFTBF) Vision Fund is the company’s largest shareholder with a 21.5% stake. Uber (UBER) and Chinese tech company Tencent (TCEHY) followed, owning 12.8% and 6.8%, respectively.

“Since the blowup with Alibaba over the last year, it is clear that the Chinese government wants to send a very clear message to all tech companies operating in China,” Guthrie said. “If you want to operate safely and securely in China today, you must be an ally of the Chinese government.”

Any company that appears to be going “too global too quickly,” he added, “is going to be pulled back into line.”

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Investors already seem to be wary of companies that are still trying to straddle the line between the United States and China. Chinese companies that are listed in both New York and Hong Kong underperformed the broader market in the Asian financial hub on Wednesday. Video-sharing website Bilibili tumbled more than 5%. Its US-listed stock plunged a combined 13% on Tuesday and Wednesday.

“It will become increasingly difficult for Chinese platforms to operate in the world’s liberal democratic markets on the one hand, while also trying to negotiate China’s tightening domestic controls, on the other hand,” Capri said.

Beijing’s tactics have already raised questions about whether too much regulation could hamper innovation. A couple of China’s most successful entrepreneurs have quit high-level positions in recent months. While they’ve cited reasons unrelated to the crackdown for stepping out of the limelight, experts have described the atmosphere in China for tech firms as “increasingly toxic.”
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Silvers, from Kaiyuan Capital, said that global investors may also find it increasingly risky to even own Chinese tech stocks — a fear that could jeopardize the ability of Chinese firms to access overseas capital.

Didi and the other companies now under investigation “were allowed to list and raise offshore capital only to have regulators open investigations almost immediately afterwards. This is extremely troubling, deeply unfair to investors, and raises serious questions regarding market integrity,” Silvers said.

He said that Beijing could reassure investors by banning companies under investigation from accessing public markets. That way, regulatory surprises would be limited.

“But until that occurs,” he added, “many may dramatically reduce or eliminate allocations for China IPOs.”

Apple Daily: Hong Kong’s biggest pro-democracy newspaper to close as Beijing tightens its grip

The news sent a deep chill through Hong Kong’s media industry and undermined government claims the new legislation would not diminish press freedom.

“But it still came as a shock when it happened,” said one journalist at the publication, who asked to remain anonymous out of security fears.

Since the law took effect, Apple Daily has been crippled bit by bit. Founder Jimmy Lai — already in jail for attending a pro-democracy rally — has been arrested and charged with colluding with foreign forces to endanger national security. Five of the newspaper’s top editors and executives have been accused of the same crime, apparently for using articles to call for foreign governments to sanction Hong Kong.

Hundreds of police officers have twice raided the publication’s newsroom, most recently seizing computers and materials — an alarming development for journalists and their sources in an increasingly sensitive environment. Several Apple Daily journalists had already quit before this month, saying the rewards of their work no longer outweighed the risk of imprisonment.

Even as official pressure piled on the newspaper, public support surged. Last Friday, after the arrest of its top editors, Apple Daily printed 500,000 copies which sold out.

Police officers raid  the Apple Daily office on June 17 in Hong Kong.
That wasn’t enough to counter a financial squeeze brought on by Hong Kong authorities. While Next Media told investors it had enough money to last 18 months from April, in recent days the paper’s bank accounts had been frozen.

On Wednesday, as the board met to discuss the paper’s future, police officers again descended on the newsroom arresting two more journalists. Hours later, the paper announced that after 26 years on newsstands, it would close its doors.

“A woman sent me a note a few days ago saying without Apple Daily she just doesn’t feel as safe as she used to with a free press as the protector of society,” said Mark Simon, one of Lai’s top advisers.

“They’re coming for everyone else soon.”

A critical voice

Jimmy Lai founded Apple Daily in 1995, channeling the wealth he’d accumulated as a textile tycoon into the Next Digital publishing operation. The mission of its centerpiece title, Apple Daily, was always clear: to criticize the Communist Party that Lai had fled mainland China from as a child.

The newspaper was a sensation, and its tabloid sensibilities quickly made it a market leader, giving Lai a huge platform to influence opinion in Hong Kong. The paper drove a paparazzi culture in the city, and at times attracted ire for its reporting methods. But it also tracked the wealth of mainland officials and their families in Hong Kong, and devoted ample resources to holding those in power to account.

An advertisement introducing the newspaper to the world made it clear Jimmy Lai knew the Apple Daily made him a target.

Beijing’s growing economic influence in the early 2000s meant that other outlets often avoided openly criticizing the Communist Party, mindful of commercial implications. Lai didn’t care. Apple Daily continued poking the bear, even if that meant major Hong Kong corporations such as Cathay Pacific or CK Hutchison Holdings never advertised with the publication.

The newspaper didn’t back down as the Communist Party under President Xi Jinping grew increasingly intolerant to any dissent — especially in its disputed or semi-autonomous territories such as Hong Kong, which after being handed back to China from Britain in 1997 was promised its own system of governance for 50 years.

That two-track setup led to a disconnect between how Hong Kongers expected to be governed and Beijing’s desire to control the city.

Lai was a key figure in a series of 2014 protests dubbed the Umbrella movement, which brought central Hong Kong to a standstill for months. His paper became a symbol of the opposition to Beijing’s plans for how Hong Kong’s leader would be selected.

When mass unrest erupted again in 2019, this time over a bill proposing extradition to China, Apple Daily’s front pages urged readers to attend huge marches, and printed anti-government posters for them to carry.

Copies of the Apple Daily newspaper -- paid for by a collection of pro-democracy district councillors -- sit on a cart before being handed out in Hong Kong on August 11, 2020, a day after authorities conducted a search of the newspaper's headquarters after the companys founder Jimmy Lai was arrested under the new National Security Law.

Anger in the city that year turned into the most serious violence Hong Kong had seen in decades: The city’s legislature was sacked, a dramatic 12-day siege unfolded at a university and the international airport was shut down, twice.

All that was too much for Beijing on Chinese soil. In June 2020, as pandemic restrictions thwarted the ability of Hong Kongers to protest, China passed the National Security Law.

In the 12 months since, nearly all pro-democracy politicians have either been jailed or have fled the territory. Apple Daily was the last major voice of the pro-democracy camp still at large.

Declining media freedoms

Apple Daily divided opinion in Hong Kong. It was loved by those who shared its liberal values and loathed by conservatives who accused it of causing chaos.

Still, its death has caused alarm about freedom of press in Hong Kong. On Tuesday, city leader Lam tried to dismiss those fears, saying that the police probe into Apple Daily was “unrelated to normal journalist work.”

Michael J. Abramowitz, president of NGO Freedom House railed against that sentiment.

“Treating independent, fact-based journalism as a threat to national security is an unacceptable attack on press freedom and comes amid a wider crackdown on freedom of expression and freedom of assembly in Hong Kong,” he said.

It is now unclear how Hong Kong’s mini-constitution — the Basic Law, which guarantees freedom of expression and the media — will operate alongside a national security law that sets increasingly narrower parameters for journalistic work.

The Apple Daily’s closure follows a slew of attacks on press freedom. The city’s police chief recently proposed an anti-fake news law; a journalist was convicted for an administrative error when investigating alleged police wrongdoing; and public broadcaster RTHK has seen its coverage squeezed.

Hong Kong media tycoon Jimmy Lai, founder and owner of Apple Daily newspaper is seen handcuffed and escorted by the guards leaving Lai Chi Kok Reception Centre on December 12, 2020, in Hong Kong, China.
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At the same time, there has been a clampdown on broader civil liberties. This year, Hong Kong’s annual Tiananmen Square vigil was not permitted to go ahead, ostensibly because of Covid restrictions, and potential attendees threatened with up to 12 months in jail.

In a sign of Hong Kong’s decreasing tolerance for political positions that diverge from those of Beijing, Taiwan announced it will remove all non-local staff from its office in the city. Taipei accused the Hong Kong government of demanding its Taiwanese staff sign a document acknowledging Beijing’s claim over the self-governing island as a prerequisite for visa renewals.

As newsstands open next week, they will be absent of the apple-bearing masthead that has been a staple for decades. Jimmy Lai remains in jail with no ability to advocate for the paper founded. In his mid-70s, it is debatable whether he will ever walk free in Hong Kong again.

“I never would have imagined it would come to this.” said Andrea Lo, a freelance journalist in Hong Kong. “Apple Daily is a huge part of everyday life for us as Hong Kongers, but not just because it has consistently been the biggest champion of the voice of the people. All of us find a lot of value in its coverage on everything from the pro-democracy protests, to real-time reports on incidents around Hong Kong.”

On Wednesday, grieving readers gathered outside the newspaper’s headquarters, holding placards, and bearing cards and flowers.

“I think people will miss the Apple Daily as a platform where they could speak freely and be critical of the government and Beijing,” said the Apple Daily newsroom staffer.

“Maybe some other media will become the substitute for us,” he added, doubtfully.

— Lauren Lau contributed to this report.