Broadcom’s takeover of VMware is once again in jeopardy despite prior approvals from competition authorities. China is considering not approving the agreement in response to trade restrictions imposed by the United States.

China is considering blocking Broadcom’s takeover of VMware. The Financial Times knows this. The takeover is worth $61 billion and will not go smoothly. Both customers and employees have already spoken out against Broadcom’s acquisition of VMware, which does not have a very good reputation in the industry. The competition authorities in Europe, the USA and Great Britain also had doubts. After lengthy research, all three bodies agreed, with the UK being the last to give the green light at the end of August. Smaller markets like South Korea have also given their blessing.

Be silent

We wrote back then that only one party could stop the deal: China. The country doesn’t have to do anything about it. In mid-August, the Chinese failed due to Intel’s takeover of Tower Semiconductor. They didn’t reject the takeover, they simply didn’t decide anything, so the deadline for the deal passed and the purchase fell through.

In all likelihood, the Chinese regulator did not do this by accident. China is the target of extensive U.S. government embargoes on the sale of advanced microchips and the technology the Chinese would need to potentially produce such chips themselves; The US wants to ensure that its own technology remains several generations ahead of China’s. Just last week, the US government tightened export rules.

China also has teeth. In response, the country can, among other things, restrict the export of certain metals and has a number of other tools to respond to the US and its allies. Perhaps the most effective tool is procrastination.

No deal without approval

Broadcom’s takeover of VMware can only move forward if China also gives its blessing. The country doesn’t even have to say “no” for the deal to fall apart. Endless research coupled with radio silence is enough. Until the blessing is received, the deal will not be approved worldwide.

It seems unlikely that Broadcom can proceed without a green light from China. In the last financial year, 35 percent of the company’s sales came from trade with China and Hong Kong. Additionally, it wouldn’t be the first time a major technology deal would be canceled due to a lack of international approval. Broadcom first unsuccessfully tried to buy Qualcomm for $100 billion in 2018. More recently, Nvidia has been trying hard to take over Arm.

Beijing has not yet decided what it will do with the Broadcom-VMware deal. For now, it is in Chinese hands, especially at a time when the US has given China the necessary reasons not to actively cooperate.