Industry at a crossroads
BorIS Johnson’s government is all over the place on industrial policy. The capacity for indecision, obfuscation and zig-zags seen in the pandemic is just as pronounced when it comes to energy and technology.
The retreat of Hitachi from a new nuclear plant at Wylfa in Anglesey, and continuing prevarication over eDf’s plans for a super-reactor at Sizewell in Suffolk, is a nightmare for the supply chain and Britain’s energy security.
Not for the first time the Government has also been caught unprepared over the future of the country’s most valuable tech enterprise – Cambridge-based Arm Holdings.
Having sold the pass five years ago when it embraced a takeover by Masayoshi Son’s Softbank, the smart- chip firm is in play again with a bid from uS gaming chip supplier Nvidia.
Instead of a robust response, Downing Street says it wants Arm to continue to make ‘an important contribution to the uK economy.’ The idea that such pusillanimous language would in any way have an impact on tech billionaires such as Son or Jensen Huang of Nvidia is cloud-cuckoo land. It is worth reflecting that when Softbank bought Arm for $32bn (£25bn), predicting it would become a global champion for the ‘internet of things’, the company was larger than Nvidia. five years on, Arm’s stalker Nvidia is worth $309bn (£237bn) and Arm just $40bn (£31bn). There can be no surprise that Huang wants to get his hands on Arm, which licenses its smart chip to Apple, Qualcomm and Samsung among others. With more ambitious and focused ownership and management, it could be several times larger.
But the idea that the Santa Clara company has any real interest in a Cambridge headquarters and jobs in Britain, whatever guarantees it may offer to sign up to, is a fantasy. Silicon valley ownership will act like a Dyson vacuum cleaner, sucking key personnel, intellectual property, r&D and patents off to California.
A bold government determined to make the uK a tech hub would block the deal, invoking powers under the enterprise Act 2002. Alternatively, it could impose severe stipulations on Nvidia, setting targets for employment, r&D spending and limits on a brain drain that gaming whizz Huang would baulk at. If the uK doesn’t block the deal, it could well fall foul of the scrap between Washington and Beijing. Softbank would then have no alternative but to float Arm, preferably in London.
The uK has a terrible recent history of nurturing good uK tech, allowing companies such as graphic chip-maker Imagination, aerospace firm Cobham and satellite pioneer Inmarsat to slip into overseas hands. As part of the pandemic response, the Government needs to claim the high ground. New nuclear investment and saving Arm would show determination. It also needs a step lift in r&D funding and tax reliefs so, at the very least, the uK’s paltry spend of 1.7pc of output matches America’s 2.7pc.
Britain’s post-Brexit commercial future depends upon it.
Bird feeder
DISNEYLAND is alive and well at online education leaders Pearson. Chairman Sidney Taurel and the board seem to live in a parallel universe in which they believe that a 32.78pc vote against the £7.4m pay package for new chief executive Andy Bird is an endorsement of an ‘outstanding candidate’.
Doubtless the former Hollywood executive will bring pizzazz to Pearson after its disgraceful record of six profit warnings in seven years.
Bird may be just the person to steer Pearson’s digital future as the company rides the boom in online university and school teaching speeded up by the pandemic.
The new boss sets out with the anvil of shareholder anger and an unresolved bonus dispute hanging around his neck.
Holiday wishes
THE ‘rule of six’ and the prospect of further lockdowns is generating conniptions across Britain about family gatherings forgone at Christmas, and struggling retailers stuck with unsold stock.
There is a more immediate worry for the uK’s modest but economically significant and creative Jewish community, which is paring back family and social gatherings for the start of the two-day rosh Hashanah – New year – festival that began at dusk last night.
May all our readers enjoy a healthy, safe and fulfilled year ahead.