The semiconductor supply chain is now almost completely disaggregated ie everyone specialises in just a small part of the value chain. ARM’s speciality is in CPU design and it has carved out for itself the enviable position of being the defacto standard for mobile applications - almost every single phone on the planet has ARM processor(s) running it. And their products are in dozens of other end applications segments as well. These chips are embedded in System on Chip IC’s and manufactured by third party companies like TSMC and UMC etc to end customer specifications, like Apple or Samsung for example.

The problem with the original SoftBank deal, and now the Nvidia deal, is that these companies will simply hollow ARM out (slash R&D, cut staff etc) to pump up the target’s value, before flogging it off or breaking it up. The stock market doesn’t value synergies, although it is quite happy to punt this aspect when M&A deals are in the offing. Given its strategic position as the defacto standard for mobile comms, that’s a serious threat.

ARM also gives the UK strategic leverage in any trade negotiations. Would we knowingly allow Rolls-Royce Jet Engines to be flogged off? No. Ditto ARM.

So, I think this is the right policy and hopefully the government will see fit to step into other deals like this and block them.

I’ve been through a PE acquisition. We were stripped bare and bits sold off before finally getting our mojo back. I benefited handsomely but we were not the company we were before and the job losses in the process were huge. It will be no different with Nvidia’s proposed take over of ARM.

(disclaimer: I was a semiconductor executive in a global MNC).