The government must stop Arm’s ‘pass the parcel’ treatment and invest

The author is Conservative MP for Tonbridge and Malling and Chair of the Special Committee on Foreign Affairs

In a show of openness following the Brexit referendum, a government keen to show the world that Britain is truly going global has waved the sale of our largest tech company – Arm Holdings – to Japanese firm SoftBank through.

The sale was intended to provide a long-term home for the UK’s sole high-tech leader – a world leader in microprocessor technology, developing software and semiconductors for a range of devices – including defence. SoftBank would ensure Arm’s innovation ability and skilled research base.

But two crucial things were unknown at the time. First was the key role Arm’s capabilities would play in protecting national security and global competitiveness at a time of rising geopolitical tensions. Second, SoftBank itself would become so overstretched. Less than four years later, Arm became expendable and opened a resale to US chip company Nvidia.

This time, the risk to national security and competition was not overlooked. now Nvidia’s $40 billion deal in February collapsed, a financial blue moon has occurred. Government can and should once again look to holding on to an enterprise that is so vital to Britain’s future.

SoftBank now wants to list Arm publicly, this time in America. Despite a vigorous lobbying campaign by the government, the London Stock Exchange and the investment community to persuade SoftBank to choose London for its initial listing, the US Nasdaq seems more likely given its technology focus and larger capital pools.

However, capital is not the only factor. The war in Ukraine, Taiwan’s chip delays, and China’s plan for silicon sovereignty make national security a key element of technological leadership. These decisions are too important to be left to a foreign owner, especially given the way Arm was treated.

Prime Minister Boris Johnson’s recent, last-ditch effort to pitch London’s election to SoftBank was welcome, but it’s far too late for timid half-measures. In the interest of national security and the scientific and technological base on which so much of our economic strength rests, we need a much bolder, longer-term strategy.

The government should now look to buy a golden share to ensure Britain’s interests are protected. We could also promise to buy a 25.1% stake in Arm Holdings at market price to facilitate, support and eventually force a London-based IPO. This would secure Arm’s future and end years of debilitating “pass-the-packet” treatment.

That wouldn’t come out of the blue. The principle of strategically supporting technology companies was introduced with the government’s $500 million investment last year to secure the future of satellite company OneWeb. UK Government Investments has both the mandate and the authority to be the long-term owner of Arm’s interest.

As an anchor shareholder, the government could then recruit other private British investors for a London-based IPO. Unlike SoftBank’s residual stake after the IPO, the government’s stake would be held for the very long term, creating reinvestment opportunities for long-term investors.

Our government would not and should not seek to control Arm or its day-to-day activities, but rather ensure that the company is run with a view to ensuring our ability to innovate scientifically in this crucial global industry. We all have skin in this game.

Protecting our own interests is not a rejection of free enterprise, but a recognition that the world is changing. Providing the security and stability Arm needs for long-term investments and protecting his ideas are matters of vital national interest. The government should act – now.

The government must stop Arm’s ‘pass the parcel’ treatment and invest Source link The government must stop Arm’s ‘pass the parcel’ treatment and invest

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