Technology

Why Nvidia’s purchase of Arm worries the U.K. tech sector

Why Nvidia’s purchase of Arm worries the U.K. tech sector

When Masayoshi Son, the billionaire founder and CEO of Japan’s Softbank, announced that he would buy the British computer chip design firm Arm for $ 32 billion in 2016, the British government was quick to praise the deal as proof that the country it was still an attractive place for foreigners. investment despite the fact that its population had just voted a month earlier to leave the European Union.

But now, four years later, Softbank is selling Arm to US chip giant Nvidia for $ 40 billion and the UK government may not have such an optimistic view of the new ownership deals.

When Softbank bought Arm, the British government forced the Japanese company to commit to a set of legally binding conditions: These included keeping Arm based in Cambridge, where the company was already in the process of constructing a new headquarters building for the company, and critically, doubling Arm’s UK workforce to 3,500 employees in five years.

The company, which now employs around 3,000 people in the UK, has yet to reach that goal. “We want more great engineers, not fewer,” he said Monday, not to mention how many more engineers his company can hire.

Instead, Huang offered more vague assurances that Nvidia will invest in an artificial intelligence research center in Cambridge, including building one of the world’s most powerful supercomputers there.

Hauser said he’s concerned that Nvidia, which is based in Santa Clara, California, will eventually move Arm’s headquarters to the United States. More importantly, he said Nvidia would destroy Arms’ business model, which has been based on its independence; chip makers and companies that incorporate their own chip designs into products, such as Apple and Samsung. All these companies compete with each other. Now Arm is being acquired by one of those competitors, who can use its position to increase the licensing fees and royalties of its rivals or to deny them access to the latest technology. Huang said that Nvidia values ​​Arm’s independence and business model.

Hauser also said he is concerned about the acquisition of Nvidia by an American company amid the growing conflict between Washington and Beijing over access to next-generation technology.

This decision on whether they are allowed to export will be made internally and not Downing Street, “he said.” I think this is terrible. “

Simon Segars, Arm’s chief executive, said restrictions on US exports were based on where a technology was designed and licensed, not on the nationality owned. It said “most” of Arm’s technology was “designed in the UK or outside the US and most of it was not under US export controls.” Huang also said that the Nvidia purchase would not change the legal jurisdiction of Arm’s technology.

Hauser has written an open letter to British Prime Minister Boris Johnson, asking him to block the deal unless Nvidia offers firm guarantees on the number of jobs at Cambridge

Prospect, a union representing science and technology workers, has joined Hauser’s call. The opposition Labor Party has also called on the government to control the Nvidia purchase. On Friday, when rumors of the impending deal surfaced, Labor’s shadow business secretary Ed Miliband said the government was “wrongly ignoring the potential consequences of this acquisition, including the potential implications for company headquarters and the thousands of jobs in Britain that depend on it. ” “

From Lovefilm, a video streaming and DVD subscription service that was bought by Amazon and incorporated into its Prime Video product, to artificial intelligence pioneer DeepMind, which was acquired by Google, many of the Kingdom’s most promising young companies. Kingdom have ended up in his hands. . of Silicon Valley’s tech giants with deep pockets.

Other mega-tech deals involving British companies have ended badly. In 2011, Hewlett Packard bought Autonomy, a Cambridge-based business software company that was a darling of the British tech industry, for more than $ 11 billion, only to reverse and cancel $ 8.8 billion of that purchase in one year. . . after. discover what was claimed to be widespread accounting fraud. The case has resulted in ongoing civil and criminal litigation on both sides of the Atlantic.

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