Daniel Zeichner tells Business Secretary: ‘Stop Arm sale now’

Cambridge MP Daniel Zeichner has urged the business secretary to intervene after reports that SoftBank, the current Japanese owners of Cambridge-based Arm, are in talks to sell the business to US company chip giant Nvidia.

The Fulbourn-based global technology giant, which employs more than 6,000 people, develops the blueprints for the chips driving laptops and smartphones - without Arm chips, your iPhone or android wouldn’t work.

Arm was formed in Cambridge in 1990 and rapidly became a global leader in chip architecture. When the company was sold for £23bn to SoftBank in 2016, there were howls of protest that one of the UK’s truly global success stories was being taken into ownership overseas. The concerns also reflected the fact it didn’t need to be sold at all: it was a massively profitable business and the deal inevitably raised questions about confidence in what was actually a very successful management team. But it was only about the money on the table, explained former Arm chairman Stuart Chambers after his 2017 departure - and short-term shareholder greed overruled any longer-term reservations.

“I do regret having to sell Arm, yes,” said Mr Chambers told The Times. “It had been hugely successful for 25 years and we very much thought there was the possibility of another 25.”

The interview provoked another storm of comment, largely hostile to the “short-termist” views of shareholders who accepted the £17-a-share offer - a premium of more than 40 per cent on Arm’s record closing price. Mr Chambers said that the offer was simply too attractive for shareholders to resist.

“Whatever they say, most investors were interested in a three-year time horizon,” Mr Chambers said. “There was one shareholder who claimed to be interested in the 10-year story and half their shareholding voted against the deal.”

Is the same thing going to happen again? The difference now is that the company is owned by SoftBank, and SoftBank’s founder and CEO is Masayoshi Son. It was always inevitable that becoming part of a conglomerate run by one individual based in Tokyo could mean that Arm could become a bit part in any wider corporate struggle, and that is precisely what could be occurring, because SoftBank lost $16.7bn in the last fiscal year and has been forced into action. In July, it pushed Arm back to focussing on chip design by spinning off its two IoT services group (ISG) businesses, but the issue now is that this may not have been enough - and Arm could be sold again.

Mr Zeichner, who opposed the original sale to the Japanese company, says that Arm is a company of national significance and the government need to ensure that this asset is in British hands.

In a letter to Alok Sharma, the business secretary, the Cambridge MP and shadow minister in the Department for Environment, Food and Rural Affairs, says: “Arm is strategically important for the UK and so I am seeking reassurances that the government will not allow it to be sold on again, and instead take back control. No other country would allow such a vital asset to be treated like this.”

Mr Zeichner says there are a number of options the government could consider, including taking a strategic stake in Arm; for the government to encourage other UK companies to form a consortium with the backing of Treasury, British Growth Fund and British Investment Bank; or to assure 50 per cent of its shares are owned by UK companies and the government.

The Cambridge MP said: “Almost every smartphone is powered by Arm chips and as the internet of things grows, yet more of Arm’s technology will be ever-present in our lives. Arm in Britain is good for innovation, good for security and good for our economy. It is time for the government to step up so we can safeguard jobs, and bring the power to decide on this vital asset’s future back to Britain.”

He is not along in ringing the alarm bell: Cambridge entrepreneur and inventor Dr Hermann Hauser has also voiced concern. In an interview with the BBC’s technology correspondent, Rory Cellan-Jones, Dr Hauser– who spun out Arm from Acorn Computers in 1990 – said: “The one saving grace about Softbank was that it wasn’t a chip company, and retained Arm’s neutrality.

“If it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to Arm.

“It will become one of the Nvidia divisions, and all the decisions will be made in America, no longer in Cambridge.”

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “While proposed acquisitions are primarily a commercial matter for the parties concerned, the Government monitors these closely.

“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.”

Arm, SoftBank and Nvidia were contacted for comment.