An employee showcases a semiconductor integrated circuit at an industry expo on October 31. Photo: VCG

China's Ministry of Commerce (MOFCOM) may block the $40 billion sale of UK chip designer Arm Holdings to US-based Nvidia, as the deal would be extremely disadvantageous to China, Ni Guangnan, an academician with the Chinese Academy of Engineering, said at an information industry forum on Sunday.

Ni said that there are two main chip architectures in the world, namely those of Intel and Arm. 

"Arm was previously a UK firm and then Japan took a majority stake. Now the US has a 70-percent stake. If the proposed acquisition succeeds, this would be extremely disadvantageous to us," he said.

"I believe our Ministry of Commerce may block this deal. It's not known whether the deal will be done, but in any case, we will not be able to use Arm products comfortably," he said.

NVIDIA and SoftBank Group Corp announced on September 13 an agreement to acquire Arm from the latter in a transaction valued at $40 billion.

Arm will remain based in Cambridge, UK while Nvidia intends to retain the name and strong brand identity of Arm and expand its base in Cambridge, Jensen Huang, founder and CEO of Nvidia, was quoted as saying in the statement posted on its website.

As the US has already restricted Taiwan-based chip manufacturer TSMC's chip exports to Chinese companies, stronger US control of Arm would deal a heavy blow to domestically made Arm CPU, an industry analyst said.

Media reports have said that the Arm sale to Nvidia still needs approval from regulators in markets including the UK, China, the EU and the US. If everything goes well, the deal may be completed within 18 months.

Ni pointed out that China needs to establish its own information technology system by relying on its advantage of huge home market demand, and make up for any shortcomings in order to control core technologies.