Dr Hermann Hauser, a founder of British chipmaker Arm, says an agreed $40 billion sale of Arm to US rival NVIDIA could result in “American vassalage” and result in the UK being blocked from “our own microprocessor technology” — in an outspoken intervention against the landmark deal agreed by both companies’ boards this week.
He spoke out after NVIDIA signed up to the largest semiconductor acquisition the market has seen; agreeing to pay Arm’s Japanese owner SoftBank a total of $21.5 billion in NVIDIA stock and $12 billion cash in the highest profile dealhigh-profile, high-impact tech deal since IBM’s $36 billion buyout of Red Hat in 2018.
Despite pledges by NVIDIA to keep jobs and innovation in the UK (including the launch of a new tech incubator and construction of an Arm-powered supercomputer) the buyout is likely to result in job losses and diminished UK influence over the company, he said; pointing to Kraft’s contentious 2010 buyout of Cadbury.
“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 many UK companies”, Hauser, a co-founder of Arm and Fellow of the Royal Society who is now a partner at Amadeus Capital Partners, noted in a public letter.
Recent UK M&A activity has been dominated by cash bids from private equity firms and overseas buyers. An alternative would have been for the government to step in and take Arm public, with a dominant “golden share” to block hostile bids and to support “national economic security”, Hermann Hauser argued.
In a letter addressed to the Prime Minister, he wrote: “As you have spent £500m to help OneWeb out of Chapter 11, which arguably is not as important to Britain as ARM, you could spend £1-2bn as the anchor investor for an IPO on the London Stock Exchange. An IPO was always the declared route to liquidity for Softbank.”
(Hauser does not spell out why he considers Arm, already owned by Japan’s SoftBank, to be any more important to Britain than other home-grown company. While the UK does put strict protection around a very limited subset of technical capabilities — and companies producing them — for example in the cryptography and associated hardware domain, it has traditionally taken a hugely laissez fair approach to foreign buyouts).
Do you agree with Hermann Hauser? Is he trying to shut the stable door long after the horse has bolted? Let us know your thoughts.