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

BBC Technology 14 Sep 2020 10:35

By Leo Kelion
Technology desk editor

ARM montage
image copyrightGetty Images/ARM

UK-based computer chip designer ARM Holdings is being sold to the 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's technology is at the heart of most smartphones, among many other devices.

Nvidia has promised to keep the business based in the UK, to hire more staff, and to retain ARM's brand.

It added that the deal would create "the premier computing company for the age of artificial intelligence" (AI).

"ARM will remain headquartered in Cambridge," said Nvidia's chief executive Jensen Huang.

"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."

A number of business leaders have signed an open letter calling on the Prime Minister to stop the merger.

A senior government source told the BBC that it would not block the sale, but said conditions could be imposed on the takeover.

Softbank made commitments to secure jobs and keep ARM's headquarters in the UK until September next year.

"But with the expiry about to happen and obviously the Brexit negotiations under way it will be very interesting to see how this develops in the future."

But two of ARM's co-founders have raised other issues about the takeover.

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

Hermann Hauser and Tudor Brown
image copyrightAmadeus Capital/Tudor Brown

"[That] means that if hundreds of UK companies that incorporate ARM's [technology] in their products, want to sell it, and export it to anywhere in the world including China - which is a major market - the decision on whether they will be allowed to export it will be made in the White House and not in Downing Street."

"It isn't to do with the ownership of the company, it's all to do with analysis of the product itself," Simon Segars told the BBC.

Mr Huang added that ARM had "some of the finest computer scientists in the world" in Cambridge and he intended to both retain them and attract others to what would become Nvidia's largest site in Europe.

Chip creators

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

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

California-headquartered Nvidia overtook Intel to become the world's most valuable chipmaker in July.

Nvidia is also one of ARM's clients, using its designs to create its line-up of Tegra central processing units (CPUs).

Nvidia will also issue $1.5bn in equity to ARM's employees.

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

Data centre
image copyrightGetty Images
"ARM is facing growing competition from RISC-V, an open-source architecture," wrote CCS Insight's Geoff Blaber in a recent research note.

Mr Blaber also suggested regulators might block the deal.

Mr Huang has said that he expects it to take more than a year to "educate" regulators and answer all their questions, but said he had "every confidence" they would ultimately approve the investment.

Analysis box by Rory Cellan-Jones, technology correspondent

And many in the UK's technology industry will agree with Hermann Hauser.

But a takeover by Nvidia, one of the many firms that licences ARM's designs, appears to pose a threat to its business model - why will its hundreds of other customers now have faith that they will have equal access to its technology?

Dominic Cummings, who has talked of the need for the UK to have a trillion dollar tech company, is leading the drive for a more interventionist approach.

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