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LONDON — Arm co-founder Hermann Hauser has said if would be a disaster if U.S. rival Nvidia buys the British company he helped to build. 

Nvidia announced Sunday that it intends to buy the Cambridge-headquartered chip designer off Japan’s SoftBank for $40 billion, saying it would create the “world’s premier computing company.”

However, speaking to BBC Radio 4 on Monday, Hauser said: “I think it’s an absolute disaster for Cambridge, the U.K., and Europe.” 

Arm is widely regarded as the jewel in the crown of the British tech industry. Its chips power most of the world’s smartphones, as well as many other devices. 

Despite some opposition, the company was acquired by SoftBank in 2016 for £19 billion ($24 billion) on the condition that it remained in the British city of Cambridge. 

Hauser said thousands of Arm employees would lose their jobs in Cambridge, Manchester, Belfast, and Warwick if Nvidia “inevitably” decided to move Arm’s headquarters to the U.S. and make the company a division of Nvidia. 

Nvidia would “destroy” Arm’s business model, which involves licensing chip designs to around 500 other companies including several that compete directly with Nvidia, Hauser said, adding that the new deal will create a monopoly. 

Nvidia was not immediately available for comment when contacted by CNBC Monday. However, this weekend it said that Arm could remain headquartered in Cambridge under the deal. It added that it will create more jobs in the country and will build a new Nvidia-powered AI supercomputer.

Hauser said the commitments were meaningless unless they’re legally enforceable. 

SoftBank Chief Executive Masayoshi Son said in a statement that “Nvidia is the perfect partner for Arm.” 

While Simon Segars, Arm’s chief executive, said in a statement: “Arm and Nvidia share a vision and passion that ubiquitous, energy-efficient computing will help address the world’s most pressing issues from climate change to healthcare, from agriculture to education.”

He added: “By bringing together the technical strengths of our two companies we can accelerate our progress and create new solutions that will enable a global ecosystem of innovators.”

However, according to Hauser, the most important and concerning issue is one of economic sovereignty.

“If Arm becomes a U.S. company, it falls under the CFI (Committee on Foreign Investment in the United States) regulations,” he said. “If hundreds of U.K. companies that incorporate Arm’s (chips) in their products want to sell it or export it to anywhere in the world, including China, which is a major market, this decision on whether they’re allowed to export it will be made in the White House and not in Downing Street,” he said. “I think this is terrible.” 

He urged the U.K. government to step in, block the deal, and help to take Arm public on the London Stock Exchange, which is what SoftBank initially planned to do. 

Major concerns

The opposition party in the U.K. raised concerns about the deal last Friday, with Shadow Business Secretary Ed Miliband saying, “the government is doing nothing in the face of the risk of the company being swallowed up by Nvidia.”

At the time, a government spokesperson said that Downing Street monitors proposed acquisitions closely. “Where we feel a takeover may represent a threat to the U.K., the government will not hesitate to investigate the matter further, which could lead to conditions on the deal,” they said. 

The U.K. has been on a mission to build an Apple-sized company of its own for years, but has had little success as many of its most promising tech companies have been sold to companies in the U.S. and China. One of the most notable examples in recent years is London AI lab DeepMind, which was acquired by Google in 2016 for around $600 million. Today, DeepMind is widely regarded as one of the world leaders in AI research.

Neil Lawrence, Amazon’s former director of machine learning in Cambridge, told CNBC: “Arm is the only large U.K. tech company that is an undisputed world leader. The majority of the world’s computer chips are made to their designs.”

“Nvidia’s original business was graphics, but their chips also happened to have the right architecture for the current generation of AI algorithms. They’ve capitalized well on that. But with so much U.K. focus on how we make ourselves a world leading economy after our departure from the European Union, it would be surprising if the deal is waved through without any form of review,” he added. 

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