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OPINION

Not so 'Armless

Not so 'Armless
September 17, 2020
Not so 'Armless

This week’s $40bn transaction will be the semiconductorindustry’s biggest ever, and scotches any previous suggestions that Arm may return to public life on the London market, which it last graced in 2016 before being sold to Japanese megafund Softbank for £24bn. That it is now worth $8bn more than the price paid by Softbank is only a minor reflection of the long-term stupid Mr Anderson refers too – Nvidia, which had been a similarly sized company to Arm when it was sold to Softbank, is now the US’s largest chipmaker, valued at just over $300bn. 

It is fair to say that despite the dominance of its technology, which powers more than 90 per cent of the world’s smartphones, Arm has hardly flourished under Softbank’s ownership – even if it is a rare success amongst a litany of investment disasters for its Vision Fund, not least the WeWork debacle. But Nvidia’s own vision for Arm is genuinely exciting, and could further extend its growing lead over rival Intel in terms of its market capitalisation. It wants Arm’s research and intellectual property to underpin a huge expansion into platforms for artificial intelligence (AI) – a potentially world-changing capability that has sent ripples of fear throughout the rest of the semiconductor industry.

As happened when Arm was sold to Softbank, the deal has also caught the attention of politicians worried that it threatens jobs at Arm’s HQ in Cambridge’s so-called Silicon Fen – even though Nvidia has openly committed to expanding its R&D presence there. That they even feel the need to do so speaks volumes about the state of the UK’s technology industry and its disjointed industrial strategy. Arm employs 3,000 people in the UK, a healthy number but equivalent to just a tenth of new jobs created in the US tech sector in just the first two months of 2020.

There are, to be fair, a plethora of interesting smaller technology companies in London, both listed and private, and no shortage of innovation happening in areas such as Cambridge and London’s Tech City into technologies including fintech and AI. But few make it very far, gobbled up once they become interesting enough to catch the attention of mighty US tech companies – take AI specialist DeepMind, for example, which was bought by Google in 2016 for $600m. If London is to retain its position as one of the world’s great markets and remain relevant to global investors, it must do better to support these industries of the future and, like US tech backers, start thinking long-term greedy instead.