Liz Truss to Push ARM for UK Listing

With the Nvidia acquisition of ARM having failed, ARM now intends to go public, but instead of listing in the UK, ARM is intending to list on the US market. What exactly does Liz Truss intend to do, why is ARM a particular cause for concern, and is it right for the government to intervene?

What exactly does Liz Truss intend to do?

The end of Boris Johnson, the rise of Liz Truss, and the end of an era all coincided in September 2022, and while the country has to contemplate what these new times mean, Liz Truss is faced with all kinds of challenges. The cost of living crisis is making it difficult for many to cope with day-to-day expenses, while the Russo-Ukraine conflict has seen energy prices rise to obscene levels. 

But for those in the tech industry, Liz Truss also has to face off with the ongoing semiconductor crises, and the recent failure of Nvidia to acquire ARM has now caught her attention. ARM, a Japanese-owned British company, has been talking about going public to help raise funds, grow the company, and provide new products, and has publicly stated this intention for years. The reason why Nvidia failed to acquire ARM in the first place came from the UK government’s hesitation to put such an important technological company under foreign control. Yet, despite this, ARM has been hinting that it will list on the New York Stock Exchange instead of the London Stock Exchange (thereby allowing US investors to obtain controlling interests and putting ARM under US law). 

As such, Liz Truss has announced that she fully intends to reignite efforts to try and convince ARM to list on the London Stock Exchange. While such talks started with Boris Johnson, his departure saw these discussions fissile away. It is unclear exactly how Liz Truss can convince ARM to list on the London Stock Exchange, but there are numerous options at her disposal. 

One option would be to prevent a sale based on national security interests, which could seriously impact ARMs’ ability to operate. Another option could be to introduce tax relief on semiconductor companies (such as the CHIPS act) that solely remain in the UK. But even if this legislation could be passed, it would need to be careful not to discriminate between different companies; otherwise, it would be potentially unconstitutional (the UK government favouring a specific company over others). 

Why is ARM a particular cause for concern?

ARM has come a long way since its founding by Acorn Ltd, and the basic RISC processors used to power Acorn machines are now able to run complex operating systems, power supercomputers, and even run in military equipment. Considering the massive amount of software and hardware support for ARM devices, it has the technical capability to be used for serious harm to a nation’s national defence. Therefore, the UK government sees ARM as a key national interest company. Not only does it provide employment for thousands in the UK (generating revenue), but it can also provide high-tech services to those involved with defence. 

A foreign entity obtaining access to ARM resources via an acquisition could potentially expose sensitive information being leaked to unfriendly nations. As such, it makes sense for the sale of ARM to nations such as China and Russia to be outright feared, and yet, Nvidia is a US company that is an ally to the UK. So, why is the UK government worried about a US entity controlling ARM?

It turns out that the US and UK don’t always have the same foreign policy, allowing both nations to take different directions on the world stage. If ARM is under British control, then it is required to follow British law, but if ARM is acquired by a US company, then it will fall under US jurisdiction. As such, a British company would be under the control of the US, and this could give the US unfair leverage over the UK and companies that rely on ARM. 

Is it right for the government to intervene?

Governments should generally regulate and not participate in economies as governments rarely make good decisions. Governments can do well when imposing regulations and rules as this costs virtually nothing to do, and those making the rules can afford to be less educated on such matters. Furthermore, governments almost always have some number of advisers who understand the area being regulated, and this information is digested into simple facts that can be understood (if barely) by mainstream politicians. This doesn’t mean that all regulations are correct and that laws being introduced are beneficial; it’s that governments who try to participate in market deals and controlling organisations never turn out well.

In the case of ARM, it makes sense for the government to intervene due to the precarious position that ARM is in. It provides products for customers in all industries all over the world, and having ARM under UK rule is essential for national security. Furthermore, ARM being controlled by foreign entities will undoubtedly see employment shift overseas due to the UK’s high living costs, which would harm UK employment opportunities. 

Overall, ARM plays a central role in UK semiconductors, and its British origin should be protected for the sake of UK interests.