NVIDIA-Arm deal: Cambridge coup or death knell for UK tech?
US tech giant NVIDIA piled on the sugar and honey with jam on the side as it reeled off the positives of its $40 billion acquisition of Cambridge silicon superhero Arm. Rather than swallowing hype about the deal hitting the sweet spot, critics triggered an alert for wasps and a potentially deadly sting.
Arm’s Japanese parent SoftBank has agreed terms for the deal and emphasised an upside that looks fabulous for Cambridge and the UK on the face of it:-
- A new and world-leading Artificial Intelligence megahub for Cambridge
- A $1.5bn equity windfall for Arm employees, potentially triggering a fresh wave of tech startups funded by newly created Arm millionaires
- A pledge to keep the superchip architect’s HQ in Cambridge and not move it to California
- Promises to grow headcount rather than cut jobs here and to physically grow Arm’s Cambridge mothership.
- The decision to exclude Arm’s potentially world-beating IoT Services Group from the acquisition.
Too good to be true? Cambridge entrepreneur Hermann Hauser thinks so and has been backed by scores of executives in an open letter to Boris Johnson warning the PM to intervene.
The UK government has promised to inspect the terms of the deal; the proposed transaction is subject to customary closing conditions, including the receipt of regulatory approvals for the UK, China, the EU and the US.
Completion of the transaction is expected to take place in approximately 18 months. That leaves room for a riptide of water to flow under a number of global bridges. Independent observers are pointing out that this could either prove the greatest thing that has ever happened to Cambridge technology or turn into a bloodbath at a time when the UK government is struggling to strike trade deals with world powers.
NVIDIA says it will create the world’s greatest AI research superhub in the UK’s leading technology cluster. It will be based at Arm’s existing Cambridge HQ building, which has been significantly extended in the last couple of years.
The Artificial Intelligence nervecentre will embrace a startup accelerator, international research collaborations, training and Fellowships. It will host an Arm-based supercomputer; the facility will serve as a broad-based hub for collaboration by AI researchers, scientists and startups across the UK and internationally.
NVIDIA says: “We are excited to be creating a world-class AI laboratory in Cambridge at the Arm headquarters: a Hadron collider or Hubble telescope, if you like, for artificial intelligence.
“NVIDIA is the leader in AI computing while Arm is present across a vast ecosystem of edge devices, with more than 180 billion units shipped. With this newly announced combination, we are creating the leading computing company for the age of AI.”
Arm CEO Simon Segars was upbeat about the proposed deal, saying: “Arm and NVIDIA share a vision and passion that ubiquitous, energy-efficient computing will help address the world’s most pressing issues from climate change to healthcare, from agriculture to education.”
“Delivering on this vision requires new approaches to hardware and software and a long-term commitment to research and development. By bringing together the technical strengths of our two companies we can accelerate our progress and create new solutions that will enable a global ecosystem of innovators. My management team and I are excited to be joining NVIDIA so we can write this next chapter together.”
Arm co-founder Hermann Hauser, representing a global cohort of complainants, doesn’t agree. He tells the PM: “We are concerned about the impact on jobs in Cambridge, Manchester, Belfast, Glasgow, Sheffield and Warwick where thousands of Arm employees work.
“The sale of Arm to Nvidia will destroy the very basis of Arm’s business model which is to be the Switzerland of the semiconductor industry dealing in an even-handed way with its over 500 licensees. Most of them are Nvidia’s competitors. Among them are many UK companies. Assurances to the contrary should be legally binding.
“Most importantly for the long term, it is an issue of national economic sovereignty: Arm is the only remaining UK technology company with a dominant position in mobile phone microprocessors. It has a market share of over 95 per cent.
“The UK has suffered from American technology dominance by companies like Google, Facebook, Amazon, Netflix, Apple and others. As the American president has weaponised technology dominance in his trade war with China, the UK will become collateral damage unless it has its own trade weapons to bargain with.
“Arm powers the smartphones of Apple, Samsung, Sony, Huawei and practically every other brand in the world and therefore can exert influence on all of them.
“A sale to Nvidia will mean that Arm becomes subject to the US OFAC regulations. There are hundreds of companies in the UK electronics industry employing tens of thousands of people who use Arm in their products. Many of them export to major global markets including China. They will all have to comply with the US OFAC regulations.
“This puts Britain in the invidious position that the decision about who Arm is allowed to sell to will be made in the White House and not in Downing Street. Surrendering UK’s most powerful trade weapon to the US is making Britain a US vassal state.”
Dr Hauser demands legally binding job guarantees for all Arm employees in the UK and a legally binding agreement that NVIDIA must not gain any preferential treatment over other Arm licensees.
He says the natural alternative to an Arm sale to NVIDIA is to take Arm public on the London Stock Exchange and make it a British owned company again with a Golden Share for national economic security.
And he lays it on the line to Boris Johnson: “As you have spent £500m to help OneWeb out of Chapter 11, which arguably is not as important to Britain as Arm, you could spend £1-2bn as the anchor investor for an IPO on the London Stock Exchange and get a Golden Share for it so that this problem cannot happen again.
“If you do not make Arm a British owned company again with a Golden Share for national economic security, history will remember you as the person who, when the chips are down, failed to act in the national interest.”