Union warns that Arm takeover would put UK tech R&D at risk

Leading science and technology union Prospect, has written to the Business Secretary Alok Sharma MP, expressing deep concerns about the future of Cambridge-based company Arm.

There are widespread reports that Arm is likely to sold by current owners Softbank to US chip maker Nvidia. This would put at risk guarantees on UK jobs and investment that were put in place when it was sold to its current owners.

Many figures in the tech sector include some of Arm’s founders have expressed concerns about a potential sale. These have also been echoed by Shadow Business Secretary Ed Miliband.

Mike Clancy, Prospect General Secretary, said:

“ARM is an innovative UK company, and a vital part of our science and technology ecosystem, but all of that is at risk if this sale is waved through with no conditions attached.

“The government say that the future of the UK economy is in science and technology, and we agree, but if they are serious about that ambition then they need to act now to secure jobs and investment in the UK.

“We can either have a serious strategy for making the UK a science superpower, or we can have a laissez faire approach to the takeover of our most innovative companies, but we can’t have both.”

Ed Miliband MP, Shadow Business Secretary, said:

“ARM is a major British success story, but the government is doing nothing in the face of the risk of the company being swallowed up by Nvidia.

“If the government truly believes in an active industrial policy, it cannot be right that they are ignoring the potential consequences of this takeover – including the possible implications for where the company is headquartered and the thousands of jobs in Britain that depend on it.

“We also know the tendency of dominance is a particular problem in the tech sector, and government must be much more vigilant about the risks of this.

“The government should show leadership and seek legally binding assurances from Nvidia should it take over the company to keep ARM headquartered in the UK rather than see jobs and decision-making moved across the ocean – the same assurances that were made when ARM was taken over by Softbank in 2016.”

The letter in full:

Dear Secretary of State,

I am writing to you concerning the proposed sale of the technology company Arm, based in Cambridge, and the impact such a sale could have on the UK technology sector, UK R&D in general and on the workforce, including Prospect members.

The growth of the tech sector in the UK in recent years, and in particular the development of a number of high value companies around Cambridge, has been hugely welcome. These companies are not only highly productive but are responsible for huge amount of R&D spending, similar in scale to giants such as BT. In the context of sluggish R&D investment across the UK, as acknowledge by the government, this makes these companies especially valuable.

I am deeply concerned that the sale of Arm from Softbank, who have made commitments around investment in the UK, to an overseas technology company would put this hugely valuable UK asset at risk and harm the precious ecosystem of our burgeoning tech sector. If we are truly to be global leaders in technology then we must avoid a situation where UK crown jewels are poached by giant corporations in other countries who have fewer incentives to invest in the UK.

This government has made much of its industrial strategy and ambition to make the UK a superpower in science and technology. These are ambitions we share, but they cannot be achieved if the fate of companies like Arm and its thousands-strong workforce is left to the market alone to dictate. The creation of ARPA is a welcome development, especially if it is accompanied by a ramping up public sector science spending, but we cannot get to where we need to be on R&D spending without significant action from the private sector. It would be irresponsible for the government to take a hand’s-off approach to a company that accounts for around 2% of total UK private sector R&D spending. Arm’s reported R&D expenditure of £656m in 2018 is equivalent to around 50% of UK business’s combined expenditure on “computers and peripheral equipment” and “consumer electronics and communication equipment” R&D in that year, while they employ around a sixth of the total UK workforce working on R&D in this field.

There are other options available, such as the government taking a direct stake in strategic companies such as Arm in order to act as anchor investors and ensure that no decisions are made that are detrimental to the goals of UK industrial strategy.

I am asking you to look at this issue and consider the long-term benefits for the UK and for the dedicated workforce in Arm before allowing this world-leading UK company to be sold.