Broadcom wants to close its $61bn deal for VMware in a couple of weeks, but the deal is in peril with Chinese government regulators.
Three people told the Financial Times that Beijing is threatening to block the merger, even after it has cleared regulators around the world, in retaliation for new US trade rules that prevent China from receiving advanced chips from Nvidia and Micron.
The US this week announced tougher measures to limit China’s access to high-end chipsets that could fuel breakthroughs in AI and sophisticated technology for its military. The US restrictions hit China, Russia and Iran and blacklisted a Chinese chip designer.
Forrester principal analyst Tracy Woo said it was unlikely China would follow through on its threats to block the deal and was more likely just trying to rain on Broadcom’s parade.
“China has been slowing the process down, but ultimately I don’t believe they will block the deal. This is a flex from China marking their presence on this major deal,” he told the press.
The FT said that China’s merger and acquisition approvals for US companies now required additional consultations with the Ministry of Foreign Affairs and the State Council and “their involvement adds to the political nature of the process”.
Broadcom said in a statement that the deal was making progress with regulators and it expected it to close 30 October.
