China has halted Japan's SoftBank's acquisition of Swiss ABB's robotics business. This move obstructs SoftBank Chairman Masayoshi Son's plans to dominate the physical AI industry, which combines artificial intelligence and robotics.
According to the Financial Times on November 5, China's National Development and Reform Commission (NDRC) has informed SoftBank that it will not approve the acquisition of ABB's robotics division. SoftBank agreed to acquire ABB's robotics business for approximately $5.4 billion last October and passed China's antitrust review in February. However, the deal was ultimately blocked during a subsequent national security review.
China's concerns center on the potential overseas leakage of robotics technology and data. Since entering China in 1992, ABB has established a local production base, manufacturing over 90% of the robots sold to Chinese customers within the country. The company employs around 12,700 people in China and has deeply integrated into the local industrial ecosystem, supported by the Chinese government and Shanghai city in building large-scale robotics production facilities.
Chinese authorities are reportedly wary that SoftBank might transfer the operational data and technology accumulated in China overseas, potentially using it for AI model training. The Financial Times also noted concerns about possible connections between SoftBank and OpenAI, in which it is a major investor.
A noteworthy aspect of this case is that China blocked a deal that had already passed antitrust scrutiny through a national security review. This indicates that the Chinese government can intervene if it perceives a change in control over critical technology and data, even in transactions between foreign companies.
In this context, the recent announcement regarding Marvell's acquisition of optical communications company Lumentum is also significant. Marvell agreed on November 2 to acquire Lumentum through a stock exchange deal, with Lumentum valued at approximately $11.5 billion. This major transaction aims to consolidate electric signal processing semiconductors and optical communication components, which are crucial for AI data centers.
Marvell specializes in high-speed DSP and network semiconductors, while Lumentum possesses high-performance lasers and optical components, along with indium phosphide (InP)-based optical semiconductor technology. The merger would provide both companies with essential technologies for data transmission in AI data centers. However, the situation is complicated by China's optical module industry. Chinese companies such as Zhongji Xuchuang, Xinyi Technology, and Tianfu Tongxin have established strong manufacturing capabilities in the global optical module market, but they rely on Marvell and Lumentum for some key components like DSPs and high-performance lasers. The merger could impact Chinese companies' procurement of essential components, pricing power, and next-generation technology development.
This transaction is likely to be subject to scrutiny by Chinese regulators. China's antitrust laws apply to mergers between foreign companies if they meet certain revenue thresholds within China and affect market competition. Given the scale of Marvell and Lumentum's operations in China, regulatory review could become a significant factor in the deal's completion. Both companies have specified in their merger agreement that approval from regulatory authorities in various countries, including the United States, is a condition for closing the deal. However, they did not separately mention approval from China in their official announcements.
China has various options for responding. It could approve the merger with conditions for non-discriminatory supply of components to Chinese customers or restrict exclusive supply or differential pricing policies. If the merger is deemed to severely undermine competition in the Chinese market, there is also a possibility that it could be blocked.
However, the ABB case and the Marvell-Lumentum case cannot be viewed in the same light. The core issue in the ABB case was the transfer of control over robotics business, technology, and data within China, which raised national security concerns. In contrast, the primary focus of the Marvell-Lumentum review is likely to be the impact on competition in the Chinese optical communications market and the supply chain for key components. Whether China will apply national security scrutiny in this case will require separate legal judgment. What is clear is that the Marvell-Lumentum deal overlaps with advanced technology sectors that China is nurturing, suggesting that stringent review criteria will be applied. As the US-China tech rivalry expands beyond semiconductors and AI models to include robotics, optical communications, and data, China's regulatory barriers are beginning to influence the restructuring of global high-tech companies.
* This article has been translated by AI.
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