The $40bn (£31.1bn) sale of one of Britain’s biggest technology companies has been dubbed a “disaster” by one of the business’s founders.
American chipmaker Nvidia (NVDA) announced overnight it had struck a deal with Japan’s SoftBank (9984.T) to buy Cambridge-based ARM Holdings for $40bn. ARM designs microchips that are used in everything from smartphones to internet-connected fridges.
Nvidia founder and chief executive Jensen Huang said the takeover would “create a company fabulously positioned for the age of AI” and have “tremendous benefits for both companies, our customers, and the industry.”
Shares in Nvidia rose over 5% in pre-market trade in New York. SoftBank shares gained 8.9% in Tokyo on Monday. The Japanese company will take a stake of “under 10%” in Nvidia as part of the deal.
However, the announcement, which came late on Sunday evening, met with almost immediate backlash in Britain.
Hermann Hauser, who helped found ARM in 1990, said the deal was “a disaster for Cambridge, the UK and Europe.”
In an interview with Reuters on Monday morning, Hauser said the deal would lessen competition in the industry, undermine ARM’s neutrality, and risk operations being moved overseas. He called on the government to step in an impose strict conditions on the deal.
“The agreement isn’t cast iron yet,” said Nicholas Hyett, a equity analyst at Hargreaves Lansdown.
“Prior to its 2016 acquisition by Softbank, ARM was seen as one of the UK’s technological jewels, and approving its sale to an overseas buyer was politically sensitive.
“That’s probably more the case now than ever – and with Softbank’s official commitments to Arm’s Cambridge site due to expire in 2021 the deal may well come with additional strings attached from the UK government.”
Hauser and Tudor Brown, another ARM cofounder, have been outspoken critics of the sale to Nvidia, which has been trailed in the press for some time.
“It will become one of the Nvidia divisions, and all the decisions will be made in America, no longer in Cambridge,” Hauser told the BBC in early August.
On Sunday, Huang said ARM would remain headquartered in Cambridge and promised to expand R&D facilities there.
“Arm Cambridge will be a world-class technology center,” he said.
Nvidia also pledged to keep ARM’s open operating model, meaning customers would not be obliged to buy ARM-designed chips that are manufactured by Nvidia.