At the end of July and into mid-August, it was reported that Nvidia was in late-stage talks with Armâs 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 UKâs official opposition party, has called on the government to end its âsilenceâ over the now completed takeover of Arm Holdings by Nvidia and insist that the British-born chip designerâs 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.
A More Powerful Grasp Over the Computing World?
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 Switchâbut even then, such an architecture is based on Armâs designs anyway). Indeed, despite Nvidiaâs 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 Armâs instruction set. After all, Nvidia is one of Armâs customers and competes with these and other companies that also utilise Armâs designs.
The UK Government Must Take Action to Protect Jobs
In what is possibly the first sign of political backlash concerning the potential takeover, the UKâs shadow business secretary, Labourâs Ed Miliband, said that ministers must ensure that any deal for Arm was ânot exploitativeâ 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 Japanâs 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, itâs unclear whether they are considering imposing similar conditions.
âIf 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,â Ed Miliband said prior to the closing of the deal.
âThe 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.â
Labourâs worries arenât 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: âWhere 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 dealâ.
Now that the deal has closed, there is unlikely to be any intervention from the UK government.