Government Blocks Sale Of ARM On Grounds Of National Security

We reported on the proposed sale of Cambridge-based Arm to US tech giant Nvidia after their £29.4 billion bid back in September when it was first announced. But, the sale of one of Cambridge’s biggest technology companies is now being blocked by the government on the grounds of national security.

The UK’s competition watchdog – the Competitions and Market Authority (CMA) has been looking at whether the takeover would incentivise Arm to withdraw, raise prices or reduce the quality of its intellectual property licensing services to Nvidia’s rivals since January, and it was thought that the sale would go ahead.

However, the Secretary of State for Digital, Culture, Media, and Sport – Oliver Dowden has this week issued a public interest intervention notice (PIIN) to stop the sale proceeding as planned. Arm, which employs over 2,000 people in Cambridge, not only designs computer chips used in over 60% of the world’s mobile devices including Apple and Samsung smartphones but also supplies a wide range of other industries including for automotive and military purposes.

Cambridge MP Daniel Zeichner welcomed the news saying “Over six months after I, and leaders in the Cambridge tech sector, were telling ministers that Arm is a strategic national asset, they seem to have finally cottoned on,” he said.

“Semiconductors underpin the UK's critical national infrastructure. So why on earth would we pass the last great British semiconductor company with global dominance in smartphones to a US tech company?

“The impact of this sale has always been about high-tech jobs and how Arm is part of the unique tech ecosystem here in the city, but it has also always had wider implications.

“This is about tech neutrality and tech sovereignty. The government must block the sale if it is against Cambridge’s and the national interest.”

The proposed sale was first announced in September when Nvidia pledged to keep Arm’s headquarters in Cambridge while expanding its work to build a “world-class” technology centre.

Though the US firm denies “any material national security issues”, Mr Dowden has ordered the CMA to begin a ‘phase one’ investigation – “Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” the Culture Secretary said.

“As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.

“We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this.”

The CMA will also advise whether the takeover could lead to a substantial lessening of competition in any market in the UK and whether it should be put through further scrutiny in a ‘phase two’ investigation.

Although this is a sudden turnaround from what was seen by the government as a great investment of foreign money into the UK Tech sector, this is not the first time concerns have been raised regarding this sale – As mentioned in our previous article discussing the sale, we believe it is very important for Arm to continue to be a beacon for the UK Tech industry and despite assurances from Nvidia, there have been a lot of concerns voiced about the company being moved overseas or stripped of its IP and value that need to be addressed. 

Let us know your thoughts, do you believe that the sale of Arm should be investigated or do you think that this is a hindrance to business and will dissuade foreign direct investment into the UK Tech markets?