Justin Sullivan/Getty Images
show image

Nvidia’s $40bn Arm acquisition is a threat to UK’s economic sovereignty, says Hermann Hauser

The US chip giant Nvidia’s $40bn (£31bn) acquisition of Arm, the Cambridge-based silicon designer, poses a threat to Britain’s economic sovereignty, Arm co-founder Hermann Hauser has warned.

Speaking to the BBC shortly after Nvidia confirmed it had reached an agreement to buy Arm on Monday morning (14 September), Hauser said the deal was a “disaster for Cambridge, the UK and Europe”.

Although Nvidia has promised to protect British jobs and invest in Arm’s UK operations following the acquisition, Hauser said the commitments were not legally binding and that the deal would jeopardise thousands of roles, as well as the company’s business model.

Hauser described Arm’s key selling point as “being the Switzerland of the semi-conductor industry”. But in his fiercest critique of the deal yet, Hauser told NS Tech earlier this month that the buyout would compromise its neutral status and allow Nvidia to steal “the microprocessor crown from Intel”, by denying the company and other competitors access to Arm IP. Arm currently provides chip designs for 95 per cent of the world’s mobile phones. Nvidia has said Arm “will continue to operate its open-licensing model while maintaining […] global customer neutrality”.

Speaking to the BBC’s Today Programme on Monday, Hauser said his greatest fear was the impact that the deal would have on the UK’s economic sovereignty. “If Arm becomes a subsidiary of a US company, it falls under the CFIUS [Committee on Foreign Investment in the United States] regulations,” he told the programme. Hauser claims the White House could exploit CFIUS’s powers to prevent any one of the “hundreds of UK companies” that use Arm’s designs in their products from selling those products internationally. “This decision on whether they’re allowed to export [these products] will be made in the White House and not in Downing Street; this is terrible.”

In an announcement published early on Monday morning (UK time), Nvidia sought to allay concerns that its decision to buy Arm from Japan’s Softbank Vision Fund, which paid $31bn for the firm in 2016 and will retain a 10 per cent stake, would imperil British jobs or the status of its Cambridge headquarters. It said it “intends to retain the name and strong brand identity of Arm and expand its base in Cambridge. Arm’s intellectual property will remain registered in the UK.”

But Hauser described the commitments as “meaningless unless they’re legally enforceable”. Labour has called on the government to seek “binding assurances” that Arm’s headquarters will remain in the UK. Hauser has gone one step further, urging the government to step in and encourage Softbank to re-list the company on the London Stock Exchange by committing “a billion or two” to the IPO.

A spokesperson for the department for business told NS Tech earlier this month that “where a takeover represents a threat to national security or financial stability, the Government will not hesitate to investigate the matter further, which could lead to conditions on the deal or a decision to block it all together”.

However, the BBC reported on Monday morning that a senior government source said the deal would be approved subject to certain conditions. Although the prime minister’s chief adviser Dominic Cummings is set on strengthening Britain’s tech sector with a more interventionist industrial strategy, some industry watchers believe the government will be unwilling to block the acquisition due to fears the move would harm US-UK trade negotiations.