London Daily

Focus on the big picture.
Thursday, Sep 18, 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
Macron and his wife to provide 'scientific photographic evidence' that she is a real woman
US Tech Giants Pledge Billions to UK AI Infrastructure Following Starmer's Call
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
DeepMind and OpenAI Achieve Gold at ‘Coding Olympics’ in AI Milestone
SEC Allows Public Companies to Block Investors from Class-Action Lawsuits
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Federal Reserve Cuts Rates by Quarter Point and Signals More to Come
Effective and Impressive Generation Z Protest: Images from the Riots in Nepal
European manufacturers against ban on polluting cars: "The industry may collapse"
Sam Altman sells the 'Wedding Estate' in Hawaii for 49 million dollars
Trump: Cancel quarterly company reports and settle for reporting once every six months
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
US Launches New Pilot Program to Accelerate eVTOL Air Taxi Deployment
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Hong Kong Industry Group Calls for HK$20 Billion Support Fund to Ease Property Market Stress
Joe Biden’s Post-Presidency Speaking Fees Face Weak Demand amid Corporate Reluctance
Charlie Kirk's murder will break the left's hateful cancel tactics
Kash Patel erupts at ‘buffoon’ Sen. Adam Schiff over Russiagate: ‘You are the biggest fraud’
Homeland Security says Emmy speech ‘fanning the flames of hatred’ after Einbinder’s ‘F— ICE’ remark
Charlie Kirk’s Alleged Assassin Tyler Robinson Faces Death Penalty as Charges Formally Announced
Actor, director, environmentalist Robert Redford dies at 89
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
JD Vance Says There Is “No Unity” with Those Who Celebrate Charlie Kirk’s Killing, and he is right!
Trump sues the 'New York Times' for an astronomical sum of 15 billion dollars
Florida Hospital Welcomes Its Largest-Ever Baby: Annan, Nearly Fourteen Pounds at Birth
U.S. and Britain Poised to Finalize Over $10 Billion in High-Tech, Nuclear and Defense Deals During Trump State Visit
China Finds Nvidia Violated Antitrust Laws in Mellanox Deal, Deepens Trade Tensions with US
US Air Force Begins Modifications on Qatar-Donated Jet Amid Plans to Use It as Air Force One
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
Elon Musk Retakes Lead as World’s Richest After Brief Ellison Surge
U.S. and China Agree on Framework to Shift TikTok to American Ownership
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
×