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UK innovation

However the UK government responds to the proposed acquisition of Arm by Nvidia, it raises questions about its plans to boost innovation in the UK.

The UK government talks a lot about nurturing science and innovation in the UK and is keen, post-Brexit, to pour hundreds of millions of pounds into tech start-ups with the aim of creating businesses capable of challenging the world’s very best.

Dominic Cummings, the PM’s chief adviser, is known to be a keen supporter of science and technology and is said to be determined to use the state’s resources to make strategic investments in the sector. In fact, reports suggest that civil servants will use a combination of research into social trends and algorithms to spot the early adoption of new technologies in order to shape and sanction investment at every stage of development.

Can the state provide a launchpad for innovation? Should it be involved in selecting ‘winners’? Could Brexit negotiations, in which state aid is proving a major stumbling block, cause the policy to flounder?

It’s known that Cummings wants to replicate the success of the US’s Advanced Projects Research Agency, set up in the 1950s and which was the driving force behind the development of drones and the Internet, and to use such an agency to turn the UK “into the best place in the world to reinvent the future.”

Lofty ambitions aside, such a policy does have its supporters. A number of economists believe that many entrepreneurs, in the technology space, tend to exploit technologies that were first developed using public funds.

Critics of the policy, however, hark back to the failed state policies of the 1960s and 1970s when ministers and civil servants attempted to identify and then fund ‘winners’. It didn’t end well then and, no matter how clever the algorithms, they view the involvement of the state in business matters as anathema.

While the government has made much of its industrial strategy and ambition to make the UK a superpower in science and technology, critics of Nvidia’s proposed acquisition of Arm suggest that those ambitions would be undermined if Arm and its workforce were left solely to the whims of the market.

“The ramping up in public sector science spending is welcomed, but we cannot get to where we need to be on R&D spending without significant action from the private sector,” said Mike Clancy, Prospect general secretary. “It would be irresponsible for the government to take a hand’s-off approach to a company that accounts for around 2% of total UK private sector R&D spending.”

Should the UK government intervene then? There are suggestions that the deal will be referred to the CMA, but in an interesting twist to the story it now emerges that China could step in and look to block the sale of Arm.

The state-backed Global Times has called the takeover ‘disturbing’ and called on global regulators to exercise caution.

The Chinese are worried that should Arm fall into the arms of a US company then access to its technology could be curtailed.

An interesting twist to an already complex story.

Neil Tyler

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In the midst of a pandemic and whilst negotiating Brexit trade agreements, the UK government, which at the best of times has difficulty understanding industry, is allowing one of the world’s leading technology companies, ARM, to be bought by its major competitor, NVIDIA, a US company. ARM is extraordinarily one of the world’s leading computer chip designers and its software is embedded in most technology from Apple to Huawei. Allowing a US company to take over ARM now will mean that the US Government will have the ability to impose restrictions on the UK’s international trade, and the UK Government will have given away a major bargaining chip in the upcoming trade negotiations with the USA.

Posted by: Damon de Laszlo, 23/09/2020

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