MAGGIE PAGANO: Don’t sell Arm, develop it into an even better British tech powerhouse
Hermann Hauser was crystal clear when I spoke to him in New Zealand via Zoom this weekend. The serial entrepreneur says it is not too late for Britain to block the £30billion bid for Arm Holdings by US giant, Nvidia.
Hauser may be thousands of miles away on his farm, where he has been stuck since lockdown, but that has not stopped the Arm co-founder from launching his one-man Save Arm campaign calling on the Government to intervene in the bid which he describes as a disaster for Cambridge, Britain and Europe.
After writing to the Prime Minister – who has yet to reply – Hauser is firing off another media blitz in a final attempt to persuade the Government to block the bid. He says time is on the UK’s side as Nvidia’s bid will take months to clear regulatory hurdles.
The chips are down: Hermann Hauser says it is not too late for Britain to block the £30billion bid for Arm Holdings by US giant, Nvidia
Some would argue that it’s already too late, that the time to intervene was four years ago when Japan’s SoftBank was allowed to buy Arm. But Hauser says that if the PM is serious about nurturing homegrown technology giants to rival those in the US and China, then they should stop the takeover on national interest grounds and use Arm to build such a rival.
His solution is ambitious. SoftBank should divest Arm and float on the London Stock Exchange as a new company backed by the UK government, taking an anchor stake of £1billion or so held as a golden share. The Arm team would then invite other interested parties such as the big licensees of its chip design technology – Apple and Qualcomm – to become minority shareholders.
There is a logic to this. Having Arm’s main clients on board as investors would help ensure its neutrality as the Switzerland of the semiconductor industry.
Staying neutral is essential for Arm’s growth because of fears over conflicts of interest as Nvidia produces its own processors.
This may mean Arm’s clients – which compete with Nvidia – will depend on a rival. Hauser, who was a fervent Remainer, also supports Dominic Cummings, the PM’s chief adviser, in his ambition to nurture British technology businesses to match its US $1trillion rivals.
Hauser believes Arm could create a powerhouse to rival Intel. Sound fanciful? Not if Arm, he says, is allowed to develop and to make its own strategic acquisitions with other great UK innovators such as the Bristol-based Graphcore, leaders in machine learning. His fund, Amadeus Capital, is an investor.
Blocking the bid on national interest grounds under the Enterprise Act 2002 is the sort of move you can imagine Cummings would encourage. But it’s unlikely because of the message it might give to overseas investors.
More probable is that the bid is referred to the Competition and Markets Authority. That would be the right decision. Hauser has serious points to make and they should be investigated. He is not alone in kicking up a fuss: many of its big clients like Apple are also worried. A referral would also give time for a rival bid to be put together.
If nothing is done, Nvidia has said it will protect the Cambridge HQ and jobs, and even suggests it will grow the UK business. But the world of chip processing is moving so rapidly that such promises are meaningless unless legally binding. If in doubt, remember Kraft’s disastrous takeover of Cadbury.