Hermann Hauser calls on Prime Minister to intervene in $40bn Arm sale to NVIDIA
Hermann Hauser has called on the Prime Minister to step in over the $40billion sale of Arm to US-based NVIDIA.
The companies confirmed the acquisition from Japanese conglomerate Softbank on Monday, when NVIDIA pledged to retain Arm’s headquarters in Cambridge and create a “world-class AI research facility” supporting development in fields ranging from life sciences to self-driving cars.
It promised to build an “AI supercomputer” and “turbocharge Arm’s R&D capacity”.
NVIDIA CEO Jensen Huang said the company was making a “significant investment in the UK”.
But Dr Hauser, who co-founded the chip design company , has urged Boris Johnson to block the deal unless “legally-binding” guarantees around jobs, Arm’s open licence business model and “unfettered access” to its microprocessor technology were provided.
He told the Cambridge Independent that NVIDIA’s promises in these areas were “not worth the piece of paper they are written on, unless they are legally-binding”.
The government has confirmed it is examining the deal.
In a letter to the PM, he warned: “Surrendering UK’s most powerful trade weapon to the US is making Britain a US vassal state.”
Cambridge’s Labour MP Daniel Zeichner also weighed in, warning that the government must intervene.
“We risk handing our key technological bargaining chip straight to a competitor – no other country in the world would be so weak and feeble,” he said.
NVIDIA – which has overtaken Intel as the world’s leading chip maker – said combining its leading AI computing platform with Arm’s vast ecosystem would create “the premier computing company for the age of artificial intelligence, accelerating innovation while expanding into large, high-growth markets”.
Arm was co-founded by Dr Hauser in 1990, when it span out of Acorn. It remained independent until it was acquired by Softbank in 2016 for $32bn. Dr Hauser opposed that deal too, but acknowledged that the Japanese company had kept its promises in the intervening years to retain Arm’s open-licence model and invest in its Cambridge headquarters.
Softbank has pursued a sale of one of its most valuable assets after posting a $12.7billion loss for the year ending March 31 – its first loss in 15 years. It will retain a stake, however, as a shareholder in NVIDIA.
Masayoshi Son, chairman and CEO of SoftBank Group Corp, said the pairing was a “compelling combination that projects Arm, Cambridge and the UK to the forefront of some of the most exciting technological innovations of our time”.
Dr Hauser was not convinced.
His letter raised concerns about the thousands of Arm jobs in Cambridge, Manchester, Belfast, Glasgow, Sheffield and Warwick.
He told the PM: “When the headquarters move to the US this will inevitably lead to the loss of jobs and influence in the UK as we have seen with the Cadbury takeover by Kraft.
“Secondly, 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 UK companies. Assurances to the contrary should be legally binding.
“Thirdly, and 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.”
And he warned that the sale would make Arm subject to US export regulations known as OFAC.
“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.”
Calling for legally-binding guarantees, he said the “natural alternative” would be 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”.
Pointing to the government’s £500million investment in OneWeb, he suggested it should provide a £1bn-2bn anchor investment for an initial public offering (IPO).
“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,” he wrote.
The letter was also signed by other industry figures. You can add your name at savearm.co.uk .
The Prime Minister’s official spokesperson has confirmed that the deal is being examined by the government.
“We recognise the vital role Arm plays in the UK’s tech sector and its significant contribution to our economy,” he said.
“The government monitors acquisitions and mergers closely, and when a takeover may have a significant impact on the UK we will not hesitate to investigate further and take appropriate action.
“The Enterprise Act provides the government with the powers to intervene in mergers where they raise concerns about national security, financial stability, media plurality and maintaining in the UK the capability to combat and to mitigate the effects of public health emergencies.
“We are investigating this deal further and ministers have spoken to the relevant companies.”
Mr Huang, the Taiwanese-American billionaire who founded NVIDIA in 1993, argued the combination of the two companies’ technology would be compelling.
“AI is the most powerful technology force of our time and has launched a new wave of computing,” he said.
“In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”
And he promised to retain the model that has enabled Arm to license its technology to more than 500 businesses – many of them competitors to NVIDIA – which has been key to its market-leading position. Arm technology is now embedded in about 90 per cent of mobile phones.
“Arm’s business model is brilliant,” said Mr Huang. “We will maintain its open-licensing model and customer neutrality, serving customers in any industry, across the world, and further expand Arm’s IP licensing portfolio with NVIDIA’s world-leading GPU and AI technology.”
Praising Arm’s CEO, he added: “Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world. Uniting NVIDIA’s AI computing capabilities with the vast ecosystem of Arm’s CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe.
“This combination has tremendous benefits for both companies, our customers, and the industry. For Arm’s ecosystem, the combination will turbocharge Arm’s R&D capacity and expand its IP portfolio with NVIDIA’s world-leading GPU and AI technology.
“Arm will remain headquartered in Cambridge. We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields. And, to attract researchers and scientists from the UK and around the world to conduct groundbreaking work, NVIDIA will build a state-of-the-art AI supercomputer, powered by Arm CPUs. Arm Cambridge will be a world-class technology centre.”
Arm’s intellectual property would remain registered in the UK, he pledged.
Mr Segars said: “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.”
Pressed over the open-licence model, he added: “That independence has definitely been part of our strength and our value, which has enabled us to ship 180 billion computers based on our tech. We are going to be maintaining that business model.”
But Cambridge’s MP, who has pressed Ranil Jayawardena, the minister for international trade , on the matter in the House of Commons, remains concerned.
Mr Zeichner said: “The promises are welcome, but sadly, they are just that – promises. We need guarantees: guarantees that Arm’s unique business model is maintained, guarantees that the HQ remains in Cambridge, and guarantees that decisions are made in the UK, not in America – this is a vital national security issue. Only government intervention can secure this. Then Chancellor Philip Hammond was quick to announce the previous sale – Rishi Sunak’s silence has been deafening,” he said.
Completion of the transaction is expected to take 18 months and is subject to regulatory approvals.
NVIDIA will issue $1.5billion in equity to Arm employees.
The transaction does not include Arm’s IoT Services Group, which has already been spun off.