America’s Nvidia is putting down $40bn to buy Arm Holdings but opponents of the deal are already lining up. The proposed purchase of the British chip designer from Japan’s SoftBank has triggered alarm in multiple quarters, including from its co-founder and UK opposition politicians. Arm’s customers, too, are said to be wary. Critics are right to warn more is at stake than the future of a British technology group. As such, the deal should be carefully scrutinised by Boris Johnson’s government.
Arm is not an ordinary company. It is one of Britain’s few homegrown technology successes with global reach. The chips it designs are sold to a range of different customers. Arm-designed components are used in 95 per cent of the world’s smartphones. Critics fear that Arm’s business model, which has thrived on this neutrality, will be destroyed under Nvidia, itself a customer. They also argue that the change of ownership will allow Washington to intervene in Arm’s customer relationships under the US’s swingeing foreign investment regulations.
These are legitimate concerns. Donald Trump has long made clear he sees America’s national interest as lying in a mercantilist approach to business. More recently, amid rising tension with China, the president has shown little compunction in interfering in the operations of technology companies to help pursue foreign policy goals. Nowhere is this more evident than in the tussle for control of the US operations of TikTok, owned by China’s ByteDance. A planned deal with Oracle was initiated by Mr Trump’s threat to ban the video app to address what his officials have claimed are economic and national security threats from China.