London Daily

Focus on the big picture.
Friday, Aug 22, 2025

Digital world-beater Arm needs a helping hand from Boris Johnson

Digital world-beater Arm needs a helping hand from Boris Johnson

The UK government is finally taking a look at the sale of the chip designer to US firm Nvidia, but why not just buy a controlling interest?

Last September, Nvidia, the American manufacturer of graphics processing chips, and the Japanese company SoftBank announced an agreement under which Nvidia would acquire the British chip designer Arm from SoftBank for $40bn. Since SoftBank had acquired Arm in 2016 for $32bn, you could say that a 25% profit on a five-year investment isn’t to be sneezed at, especially if industry mutterings about SoftBank’s crackpot investment strategy and Arm’s internal difficulties with its China-based operation are to be believed.

But even if one were foolish enough to sympathise with SoftBank’s desire to climb out of the hole it had dug for itself, the idea that Arm should be sold to a US chip manufacturer is so daft that even Boris Johnson’s administration had begun to smell a rat. And so on Monday it announced that the secretary of state for digital, culture, media and sport was “intervening in the sale on national security grounds”, based on advice received “from officials across the investment security community”. To which decision the only possible response is: what took him so long?

To fully appreciate the idiocy of allowing the Nvidia deal to go ahead, some technical background might be helpful. Arm is a remarkable Cambridge-based company that emerged from the UK’s early lead in microcomputers in the 1980s, triggered by the BBC’s digital literacy project and the emergence of the BBC Micro. This famous machine was designed by Acorn, a Cambridge startup, and it provided the platform on which a generation of programmers and game designers first learned the basics of their craft.

After the success of the BBC machine, the question for Acorn’s founders was: what next? Their answer was to design a new kind of processor called a Risc (reduced instruction set computer) machine that had the potential for faster, cheaper and more energy-efficient computing. The company they set up to develop this idea was originally called Acorn Risc Machines, hence the acronym Arm, though it eventually became Advanced Risc Machines.

Arm was based on a clever idea from the outset, but the real stroke of genius was its co-founders’ invention of a novel business model. The company would not manufacture chips, but merely design processors to exploit Risc architecture and license the designs to anyone who wanted to actually manufacture the chips while paying royalties to Arm for the use of its intellectual property. This was astute because chip manufacturing is a hugely capital-intensive business feasible only for big companies with very deep pockets and an appetite for risk.

The key to Arm’s extraordinary growth was the smartphone revolution kicked off by the Apple iPhone in 2007. Suddenly, the world shifted to everyone wanting a powerful handhold computer that could access the internet. And all those little computers needed processors that were small, powerful and – most importantly – consumed as little power as possible. In other words, Arm designs. The result: something like 95% of all the mobile devices in the world now run on Arm-designed processors. That’s a British success story on an unimaginable scale.

But here’s the critical bit: Arm doesn’t make chips – that business is left to what are called “silicon foundries”, ie semiconductor fabrication plants. If you need a processor for your new phone or tablet or other gizmo and you’re willing to pay the royalty, you can use an Arm design. And so can your competitors. Arm can – and does – license its designs to all-comers because it’s not involved in their business! It doesn’t compete with its customers.

Nvidia, however, does make processors. Its graphics processing units (GPUs) are the wonders of the silicon world. Originally dominant in the areas of computer gaming, graphics processing and film animation, it turned out that they are also terrific for building machine-learning systems and neural networks – all stuff that happens on desktop computers or in large racks of servers in datacentres. And as the feeding frenzy over machine learning has become frenetic, Nvidia is booming, because it’s surfing a tsunami.

But it doesn’t really have a serious foothold in the mobile computing world, which is why it was hooked when SoftBank decided to dispose of Arm. In the crazed world of corporate mergers and acquisition it probably looks like a smart purchase. But in the long run it’s a way of crippling Arm (or perhaps even destroying it) because all chip manufacturers are, ultimately, competitors of Nvidia. They’re in the same business and in that racket only the paranoid survive.

If the Johnson administration is really serious about the UK continuing to have some real clout in the global digital economy, then letting the country’s one genuinely world-beating company go to a US firm (which is subject to US government rules about technology exports to China) would be certifiable lunacy. And the annoying thing is that an obvious solution exists: the government should take a 51% stake in Arm to protect it from corporate raiders and let it get on with what it does best.

Newsletter

Related Articles

0:00
0:00
Close
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
Jellyfish Swarm Triggers Shutdown at Gravelines Nuclear Power Station in Northern France
×