Blog: The Guardian view on Brexit’s foreign takeover: losing control of tech – The Guardian

Brexit was supposed to be about taking back control, re-asserting Britain’s authority over what goes on within its borders and breaking free from outside meddling in our affairs. But if the proposed £30bn acquisition of Arm Holdings, a global leader in processor design, by California’s Nvidia is waved through by Boris Johnson, then, far from reclaiming sovereignty, Britain would be forgoing it. Arm may be owned by Japan’s SoftBank but its headquarters are in Cambridge and its intellectual property is overwhelmingly British. That means Arm is not subject to US export laws. But it would be if Silicon Fen’s biggest company ended up in American hands.

Competition over control of key technologies has seen states, and the EU, internationalise their standards and try to impose their regulations on other countries. The US is at the forefront of such practices. Monday was the last day that US-origin technology shipments could leave ports destined for use by Huawei, because in Washington’s eyes the company’s links to the Chinese government make its telecoms equipment a security threat. Arm’s designs power more than 95% of smartphones. What if the White House decided Arm could no longer supply Chinese companies or European – or even UK – ones?

There are more acute concerns. Nvidia, the world’s most valuable chip company, says it will keep Arm in Cambridge. These assurances are not legally binding. In the undesirable event that the sale goes ahead they ought to be. About 2,500 people work in Arm’s Cambridge headquarters and many more in other UK cities. There would be a brain drain to Silicon Valley. Nvidia has form: it bought and closed down another UK semiconductor company. Its ownership would threaten Arm’s business model. The Cambridge outfit makes money by licensing its processor designs. Nvidia is one of Arm’s customers. Other chipmakers that rely on unfettered access to Arm’s cutting-edge technology would fret about losing it to a rival manufacturer. It might also spur the adoption of open-source alternatives to Arm’s processors.

Chip technology is at a turning point. Moore’s Law – that shrinking processor size would double its performance every couple of years – has slowed to a crawl. Chip components are now atom-sized. Yet Arm’s skill in design, via clever stacking, could reaccelerate processor power. Arm’s adoption by Apple and Fujitsu means that it could dominate the global market in personal computers and vast data centres, which are the backbone of the internet. Hermann Hauser, Arm’s co-founder, is right to say the company’s sale surrenders the “UK’s most powerful trade weapon to the US” rendering “Britain a US vassal state”.

Decades of ministerial unwillingness to distinguish among activities that create, redistribute and destroy value has cost this country dear. Arm’s sale is not a done deal. It should be halted and ministers ought to force it to be taken public, with the state holding an “anchor” share. Mr Johnson says reverting to World Trade Organization rules would be a “good outcome” for Britain. But these were designed for textiles not technology. Britain should protect prosperity-inducing innovation. Washington may be angered. But if the US is free to close its market to Huawei, then why can’t Britain defend its national interest over Arm? Should Mr Johnson refuse to act, his Brexit would seem to be about destroying rather than creating value for the UK.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s