By Lina Saigol and Jack Denton
The U.K. government is assessing the impact of Nvidia’s $40 billion takeover of Arm, as pressure for it to intervene and protect the Cambridge-based chip maker grows.
It comes amid a growing backlash against the deal, as shareholders, politicians and industry experts raise concerns over national security, the loss of crucial homegrown technology, and key roles to a foreign buyer.
The Santa Clara, California-based graphics chip giant announced a deal on Sept. 13 to buy Arm from its current owner, SoftBank /zigman2/quotes/207303954/delayed JP:9984 +0.33% of Japan, in a move designed to transform the global semiconductor landscape.
Arm’s chips are used worldwide to help power mobile device processors for companies including Apple /zigman2/quotes/202934861/composite AAPL +0.0087% , Amazon /zigman2/quotes/210331248/composite AMZN +0.08% , Samsung and Qualcomm /zigman2/quotes/206679220/composite QCOM -2.08% .
Critics of the deal have warned that Arm’s acquisition by Nvidia /zigman2/quotes/200467500/composite NVDA -3.30% , which recently overtook Intel /zigman2/quotes/203649727/composite INTC -3.07% to become the world’s most valuable chip maker, will place too much dominance in one company’s hands.
The deal still needs to gain approval from regulators in a number of countries, including the U.S., the U.K., and China, and in the European Union.
What has Nvidia promised?
Nvidia has pledged to keep Arm’s headquarters in Cambridge and expand its research and development presence in the English city, including building an artificial intelligence and education center.
It said it will not change Arm’s business model of licensing its designs to customers, and Nvidia has promised to add its own technology to the portfolio of intellectual property that Arm can license.
When SoftBank acquired Arm in 2016, it made legally binding assurances that the headquarters would stay in Cambridge, and to double the company’s U.K workforce over five years.
Arm employs around 6,500 people globally, of which 3,000 are in the U.K., with 2,500 in Cambridge.
But SoftBank’s agreements are due to expire in September 2021. That means that unless Nvidia makes new legally binding promises, its U.S. owner will be able to decide on Arm’s future in the U.K., unless the British government intervenes.
National security concerns
Ed Miliband, shadow business secretary of the opposition Labour Party, welcomed Nvidia’s plan to give legally binding assurances on Arm. But he said they need to be spelt out “urgently” and scrutinized by the government.