The Labour party has called on the government to intervene to prevent parts of the microchip designer Arm from being moved out of the UK if it is bought by the US chipmaker Nvidia.
Ed Miliband, the shadow business secretary, said the government should seek “legally binding assurances” from Nvidia that it would not move Arm’s headquarters out of Cambridge.
Arm, the UK’s most valuable tech company, could be sold by its owner, SoftBank, to Nvidia for more than $32bn (£25bn), according to reports that first emerged in July.
Arm designs chips that are adapted by manufacturers and used in most mobile phones as well as computers and, increasingly, devices connected to the “internet of things”.
Apple uses Arm-based chips in its iPhones, and in June it said it would move to Arm’s architecture for its Mac computers, in a blow to its previous chipmaker, Intel.
Arm was bought by the Japanese investment company SoftBank in 2016, shortly after the EU referendum. The Conservative government portrayed the investment as a vote of confidence in the UK after the Brexit vote rattled markets, but it also insisted on guarantees that jobs would not move out of the UK. Arm employs 6,500 people worldwide, including 3,000 in the UK.
Miliband said similar conditions should be imposed on Nvidia if it proceeds with an offer. He also suggested the government should expand the Enterprise Act to include a public interest test if an acquisition may have long-term implications for the UK’s industrial strategy.
“Arm is a major British success story, but the government is doing nothing in the face of the risk of the company being swallowed up by Nvidia,” Miliband said. “If the government truly believes in an active industrial policy, it cannot be right that they are ignoring the potential consequences of this takeover – including the possible implications for where the company is headquartered and the thousands of jobs in Britain that depend on it.”
A UK government spokesman said: “While proposed acquisitions are primarily a commercial matter for the parties concerned, the government monitors these closely. Where we feel a takeover may represent a threat to the UK, the government will not hesitate to investigate the matter further, which could lead to conditions on the deal.”
Miliband’s criticisms of the potential deal echo those of Hermann Hauser, an investor who was one of Arm’s co-founders. Hauser said one of the key conditions on Nvidia should be a guarantee that Arm is allowed to maintain its business model, which allows the British company to work with any chip manufacturer, including Nvidia’s rivals. “It is very much in Nvidia’s interest to kill Arm,” Hauser told the Guardian.
He said the government should intervene in any deal to protect its “technological sovereignty” and prevent one of the most prominent British tech companies from potentially being subject to national security orders from the White House. Letting a US company buy Arm would be “equivalent to selling Trident”, he said, referring to the UK’s nuclear weapons system.
He suggested the government should instead signal its willingness to act as an anchor investor in a listing of Arm on the London Stock Exchange.
The government has already proven its willingness to invest in UK technology companies after spending £500m on a stake in OneWeb, the bankrupt satellite company, in a decision driven by Boris Johnson’s key adviser, Dominic Cummings. Before arriving at Downing Street, Cummings bemoaned the government’s willingness to allow Google to buy the British artificial intelligence company DeepMind.
Hauser has written to Johnson outlining his concerns, but has not received any response.
A purchase of Arm by Nvidia would further embed it at the heart of the global semiconductor industry, which is expected to take an increasingly central role in geopolitics. Nvidia shares have more than doubled in value in 2020, even after a retreat in recent weeks during a tech share rout.
Arm and Nvidia both declined to comment. SoftBank did not respond to requests for comment.