September 20, 2020 by Luke James
The UK Government has been urged by its Labour party to ensure that Nvidia doesn’t move Arm’s headquarters to the U.S., as this will put UK jobs at risk.
At the end of July and into mid-August, it was reported that Nvidia was in late-stage talks with Arm’s owner, SoftBank, to buy the UK-based mobile chip company whose designs are at the core of Android and iOS devices alike. The potential deal is worth over $32 billion according to Bloomberg.
Now, the Labour party, the UK’s official opposition party, has called on the government to end its “silence” over the now completed takeover of Arm Holdings by Nvidia and insist that the British-born chip designer’s headquarters remain in the United Kingdom.
Inaction on the part of the UK government could also cause tensions in the trade negotiations between the UK and Japan. The UK is hoping to secure a speedy trade deal with Japan when it leaves the European Union next year.
A Nvidia corporate office. Image Credit: Nvidia News.
When it comes to companies that might be interested in taking over Arm, Nvidia may not immediately seem an obvious one: although Nvidia is the market leader when it comes to graphics processing units (GPUs), it has very little to do with central processing units (CPUs) and mobile hardware (outside of its Tegra mobile chipsets, famously used by the Nintendo Switch—but even then, such an architecture is based on Arm’s designs anyway). Indeed, despite Nvidia’s efforts, it has failed to gain a strong grasp over mobile hardware market, especially in terms of the smartphone industry.
A Nvidia Tegra chip that uses Arm architecture. Image Credit: Nividia.
Nevertheless, the acquisition of Arm by Nvidia will provide the GPU behemoth with a great deal more power over the computing world in general. It could also kick up a fuss in the competition world and lead to scrutiny from regulators.
Furthermore, companies such as Apple, Qualcomm, and Intel could also demand assurances that Nvidia would continue to provide equal access to Arm’s instruction set. After all, Nvidia is one of Arm’s customers and competes with these and other companies that also utilise Arm’s designs.
In what is possibly the first sign of political backlash concerning the potential takeover, the UK’s shadow business secretary, Labour’s Ed Miliband, said that ministers must ensure that any deal for Arm was ‘not exploitative’ and that action must be taken to protect jobs.
Arm has around 6,500 employees globally, with 3,000 of them working in the UK. When Arm was sold to Japan’s SoftBank in 2016 for $31.4 billion, the UK government stepped in and attached conditions that compelled the company to maintain its UK headquarters and double its British workforce over five years. This time around, ministers are thought to be taking a close interest in the negotiations, but as of yet, it’s unclear whether they are considering imposing similar conditions.
“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,” Ed Miliband said prior to the closing of the deal.
“The government should show leadership and seek legally-binding assurances from Nvidia, should it take over the company to keep Arm headquartered in the UK rather than see jobs and decision making moved across the ocean.”
Labour’s worries aren’t without merit, either. In 2011, Nvidia purchased Bristol-based Icera and then sacked its entire UK workforce of more than 300 in 2015.
A spokesperson for the UK government said: “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”.
Now that the deal has closed, there is unlikely to be any intervention from the UK government.
