The much-rumoured $40B purchase of ARM by Nvidia seems to now be underway. Most of us in the technology scene here in Cambridge, UK, the home of ARM, are not at all surprised, but the news has certainly not gone down well with some of ARM’s founders. Both Herman Hauser and Tudor Brown have been very vocal in their concerns over the deal. Their concerns are many, and valid:

As the founder of a Cambridge-based deep-tech start-up company, I’ve felt the halo effects of having a company like ARM in our ecosystem for many years. Some of ARM’s original founders are key players in the early-stage venture capital groups within Cambridge, and there are dozens of current and past senior executives acting as mentors and consultants within the local technology scene. When we closed our first major chipset deal, we benefitted greatly from the advice and support of people within the ARM ecosystem who had trodden the same path before us and were willing to help out another plucky Cambridge company taking on the big boys. Many companies in the Cambridge deep-tech sphere are today built upon the same IP licensing-and-royalty model that powers ARM. Without the low-power high-performance ARM processors in smartphones and wearables we would not have had the huge growth and success in purely-app-based companies that we have witnessed over the last decade. ARM has been a bedrock of the UK tech startup scene for decades.

Many fear that this is the beginning-of-the-end of a golden era for UK-based chipset design dominance, but is it any surprise that the ARM story that began by kick starting the Silicon Fen would end by heading home to roost in the Silicon Valley? I would argue that ARM has done well to remain a UK-based powerhouse for as long as it has.

Looking ahead, there will still be some benefits to the UK ecosystem if this deal goes through

  • Regardless of the fears of a relocation, Nvidia are promising to maintain and grow the Cambridge headquarters into a world leading AI research facility. Other world-leading entities like Deep Mind have managed to maintain their UK keystone regardless of the pull of a Silicon-Valley-based parent company.
  • There was a noticeable exodus of ARM staff following the Softbank purchase 4 years ago. For ARM execs and senior staff who are unhappy with the new change of ownership, the redistribution of ARM talent into the Cambridge startup ecosystem will be greatly beneficial to the next ARM that is still finding its feet in the Silicon Fen.
  • Some ex-ARM execs will choose to move not into startup companies directly, but into the Angel Investing, Venture Capital, and Non-Executive Director scenes, strengthening an already broad and successful early-stage investing ecosystem in Cambridge.

The Nvidia-ARM M&A story is by no means over yet, as the UK Government will first scrutinise the deal to understand the near and long term impacts on the UK economy that the deal may represent. One of the most interesting factors that could also torpedo the whole affair is the existence of ARM China and any powers they may have in vetoing the deal. This two-year old joint venture between ARM and China has been particularly rocky with corruption allegations swirling around ARM China’s CEO and a literal standoff taking place in ARM China offices as they refused to allow ARM representatives into the buildings. With relationships already strained, and the overriding trade war between USA and China, there is a good chance that ARM China will try to prevent the Nvidia purchase from completing.

The next wave about to come crashing down on this silicon soap opera is the Brexit deadline looming at the start of 2021. The Brexit vote triggered a drop in the UK currency which handed SoftBank a healthy discount on ARM back in 2016. The Brexit situation is by no means rosey right now, and another drop in the Pound is highly likely. If so, the ARM sale saga may take a new twist – a bidding war.