ARM: Foreign Acquisition

Jim Shannon Excerpts

Monday 21st September 2020 Commons Chamber

[Daniel Zeichner (Cambridge) (Lab)]

Earlier this evening, BBC Look East reported that this was a debate worth waiting up for, so we surely must not disappoint. I am very grateful for the opportunity to raise an issue vital to my constituency, but also important for the future of the wider UK economy. I declare at the outset that I am a member of Unite the union, and I am very grateful to it for giving me the opportunity to hear directly from members employed at the company.

This urgently needed debate is to secure answers on the future of one of the UK’s most successful tech companies, ARM, which is based in my constituency. It was confirmed last Monday that it was being sold to the American tech firm Nvidia. Since it was founded in 1990 in Cambridge, ARM has become one of the UK’s best home-grown technology success stories, with huge global reach. It now designs and licenses the basic blueprints of chips used in around 90% of the world’s smartphones, as well as countless sensors, smart devices and cloud devices. Hundreds of global companies license its designs, including Apple, Samsung, Huawei and Qualcomm, putting the UK firmly at the centre of global technological development. ARM employs around 2,700 people in the UK, many in highly skilled, high-tech jobs. They work in its headquarters in Cambridge and across the country in Belfast, Manchester and Warwick.

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Gentleman on securing this Adjournment debate. I share his concern, as I have a number of high-tech and modern manufacturing companies in my constituency. Does he agree that the proposed sale will be against the national interest and the UK’s ambitions to be a European technological powerhouse? It is important for us in the UK to look after our own.

[Daniel Zeichner]

The hon. Gentleman anticipates my arguments, because there can be little doubt that this home-grown tech star is a great national asset for the country. Back in 2016, alongside many in Cambridge and across the UK tech sector, I was hugely disappointed to see ARM sold to the Japanese conglomerate SoftBank. I warned then that we were losing control of this important national asset, and I fear we are now seeing that warning borne out.

ARM’s sell-off in 2016 was backed by this Government with conditions that its headquarters would stay in Cambridge and its staff would be maintained, and so far that guarantee has been honoured, but we are now faced with a new situation with the news of the sale last Monday. Back in 2016, the then Chancellor, Philip Hammond, considered it so significant that he announced the deal personally and legally binding guarantees enforceable by the Takeover Panel were secured. This time there has been silence from Government—a silence that I hope will be broken this evening. Although I recognise the sensitivities around commercial confidentiality, the same applied back in 2016. We need to know what the Government’s view is on the transfer of a key UK- based technology giant, particularly in such uncertain times.

--- Later in debate ---

[Caroline Dinenage]

I will in a moment. I will make a bit of progress, then I will be happy to take the hon. Gentleman’s questions.

The Enterprise Act 2002 allows the Government to call in transactions on four public interest grounds: financial stability, national security, media plurality and public health emergencies. When a Secretary of State decides to intervene under the Act, they declare a public interest intervention notice. That triggers a deadline for the Competition and Markets Authority to conduct what it calls a phase 1 investigation. The CMA will then engage with the parties while it gathers the information and publishes an invitation to comment notice. That invites views from the merger parties and other interested third parties on the transaction under review. At the end of that phase 1 stage, the Secretary of State can: clear the merger, clear the merger with undertakings, or refer the merger to a phase 2 investigation. At the conclusion of the phase 2 investigation, the Secretary of State would consider if the transaction meets the threshold for intervention on public interest grounds under the Enterprise Act, and therefore make a decision on the necessary steps if and when it would be appropriate to do so.

The reason I am explaining that to the hon. Gentleman is that I think it is really important to articulate the number of very careful steps we would have to take in that process. In this instance, the Secretary of State for Department for Digital, Culture, Media and Sport would be the final decision maker. It is obviously extremely critical that he does so with an independent mind, having received all the relevant information and without prejudice. I am sure he will understand that while I am very happy to stand at the Dispatch Box and answer as many of his questions as possible, I have to be very careful not to say anything that could in any way prejudice that decision or any future moves. However, I will try to answer as many of his questions as I can.

As the hon. Gentleman will know, on Monday 14 September Nvidia and Softbank Group announced a definitive agreement under which Nvidia will acquire ARM Limited from Softbank in a transaction valued at $40 billion. The announcement stated that Softbank will remain committed to ARM’s long-term success through its ownership stake in Nvidia, which is expected to be under 10%. Furthermore, the statement said that ARM will remain headquartered in Cambridge. Nvidia and Softbank have made statements to the media expressing their commitment to maintaining ARM as a successful business in the UK. They have suggested that they will build on ARM’s R&D presence here by establishing a global centre of excellence and will create a platform for global innovation with industry partners across multiple fields. We will consider all those statements incredibly carefully.

[Jim Shannon]

Yesterday’s papers suggested that last year ARM paid some £268 million in tax and that it has the potential to be Britain’s first trillion dollar company. Has the Minister had any assurances from the company about its commitment to keeping its tax base here, and thereby the tax it pays to Her Majesty’s Revenue and Customs her as well?

[Caroline Dinenage]

We have had conversations with the company at various points over recent months. However, I do not want to prejudice the situation in any way, shape or form, so I do not really want to discuss any of its commercial aspects, if the hon. Gentleman will forgive me.