City comment: The real reason to oppose the US takeover of ARM

Some of those who just hate the idea of ARM being sold to some American outfit talk as if we were staging a fight for its UK independence.

That made have made some sense before ARM was sold to Japan’s SoftBank four years ago — at this point it is rather tilting at windmills.

If government policy were to foster national champions and protect them at all costs, then getting shirty about foreign takeovers would be fair enough.

It isn’t, it’s a free market, the key issue being reciprocity.

Can UK companies takeover US rivals? They can and they do, it just tends not to make as big a splash as when it happens the other way around.

BAE Systems bought US defence contractor GPS for $2 billion in January, for example. No one complained.

On the ARM deal the political pressure is such that the government will ask Nvidia to protect UK jobs and maintain the UK headquarters. Nvidia will nod along, certain in the knowledge that later on it can do what it wants anyway (tricky thing, international law).

So the real question is whether Nvidia is the right owner of ARM. On that, well, we’ll find out, but the risk must be that ARM’s unique neutrality will be hurt by being owned by the Americans and the Chinese take revenge.

At the moment, ARM’s designs are used by both US and Chinese companies. It is one of the reasons ARM is so valuable. That must be at risk under US ownership. That would be the better grounds for opposing this deal.