ARM: UK-based chip designer sold to US firm Nvidia

UK-based computer chip designer ARM Holdings is sold to American graphics chip specialist Nvidia.

The deal values ​​ARM at $ 40bn (£ 31.2bn), four years after it was bought by Japanese conglomerate Softbank for $ 32bn.

ARM technology is at the heart of most smartphones, among many other devices.

He added that the deal would create “the premier computing company for the age of artificial intelligence” (AI).

“ARM will continue to be headquartered in Cambridge,” said Nvidia CEO Jensen Huang.

“We will expand this large site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields.”

Softbank has promised to secure jobs and maintain ARM’s UK headquarters until September next year.

“Until now, when you read the announcement coming from Nvidia, they said they will honor what Softbank did at the time,” said Sonja Laud, chief investment officer at Legal & General Investment Management.

“But with the expiration about to happen and obviously the Brexit negotiations underway, it will be very interesting to see how this plays out in the future.”

But two of ARM’s co-founders have raised other issues about the acquisition.

Hermann Hauser and Tudor Brown had suggested that ARM should remain “neutral”, rather than be owned by a company like Nvidia, which produces its own processors.

The concern is that there would be a conflict of interest as ARM’s clients would become dependent on a business with which many also compete for sales.

Furthermore, the two co-founders also claimed that once ARM was owned by an American company, Washington could attempt to prevent Chinese companies from using its knowledge as part of a broader trade conflict between the countries.

Nvidia has said it intends to maintain the “global customer neutrality” on which ARM’s success rests.

ARM creates computer chip designs that others then customize for their own purposes. It also develops instruction sets, which define how the software controls the processors.

It is based in Cambridge but also has offices around the world, including a joint venture in Shenzhen, China.

Hundreds of companies license their innovations, including Apple, Samsung, Huawei, and Qualcomm. To date, ARM says 180 billion chips have been made based on its solutions.

When Softbank acquired ARM, it promised to keep the company’s UK headquarters and increase the number of local jobs, which it did.

Softbank founder Masayoshi Son described the company as a “crystal ball” that would help him predict where technology was headed. But losses in other investments, including office rental company WeWork, prompted a rethink.

California-based Nvidia surpassed Intel to become the world’s most valuable chipmaker in July.

Until now, it has specialized in high-end graphics processing units (GPUs). These are commonly used by gamers to deliver more detailed images, as well as by professionals for tasks including scientific research, machine learning, and cryptocurrency “mining.”

Nvidia is also one of ARM’s customers, using its designs to create its Tegra line of computer processing units (CPUs).

Under the terms of the deal, Nvidia will pay Softbank $ 21.5 billion in its own shares and $ 12 billion in cash. You will follow up with up to an additional $ 5 billion in cash or stock if certain goals are met.

Nvidia will also issue $ 1.5 billion in capital to ARM employees.

Mr. Huang has already said that one of the changes he wants to make is to accelerate the development of ARM designs for CPUs used in computer servers, a rapidly growing industry.

But experts say one of the risks facing Nvidia is that the acquisition could encourage ARM’s broader customer list to shift focus to a rival type of chip technology, which lags behind in terms of adoption but has the advantage of not being controlled by a single company.

“If its partners believed that the integrity and independence of ARM is compromised, it would accelerate the growth of RISC-V and in the process devalue ARM.”

Blaber also suggested that regulators could block the deal.

“This process will take months, if not years, with a high probability of failure,” he told the BBC.

It’s a deal that the man who founded ARM says is a disaster.

And many in the UK tech industry will agree with Hermann Hauser.

He opposed the 2016 sale of the chip designer to Softbank, but accepted that the Japanese firm maintained its guarantees to boost employment and research at Cambridge.

But an acquisition by Nvidia, one of the many firms that licenses ARM’s designs, appears to pose a threat to its business model: why will its hundreds of customers now have faith that they will have equal access to its technology?

In recent days, leading figures in Cambridge tech have lobbied Downing Street, calling on ministers to intervene to bring ARM back to UK ownership. There have been signs that the government is considering a more active industrial policy.

Dominic Cummings, who has spoken about the need for the UK to have a trillion dollar technology company, is leading the push towards a more interventionist approach.

Now, with Hermann Hauser and others warning that this deal will make Britain a vassal state of the United States, the government is under pressure to intervene and ensure that control over vital local technology is not lost to a foreign power.