Skip to main contentSkip to navigationSkip to navigation
The University of Cambridge, the origin of much of the city’s leadership in tech and biosciences.
The University of Cambridge, the origin of much of the city’s leadership in tech and biosciences. Photograph: Nick Ansell/PA
The University of Cambridge, the origin of much of the city’s leadership in tech and biosciences. Photograph: Nick Ansell/PA

Cambridge’s Silicon Fen shaken by the winds of change

This article is more than 7 years old
The takeover of ARM by Japan’s SoftBank has added to unease in Cambridge over the city’s growing pains and the potential risks of Brexit

The crown jewel of Britain’s technology sector might be heading to Japan via a £24bn takeover but it seemed to be business as usual in ARM Holdings’ home city of Cambridge, bathed in summer sunlight. The Science Park was buzzing with young executives, the river punts overflowing with tourists and the college buildings as beautiful as ever.

Scratch the surface of “Silicon Fen”, however, and there is significant unease – and not only about the planned purchase of ARM by SoftBank.

Cambridge has been suffering enormous growth tensions for some time and has been served up with a Brexit vote it did not want, as well as absorbing another huge corporate asset grab.

“This [the ARM deal] is a symptom of the country being financially broke and all our means of wealth are being plundered by the rest of the world,” said Peter Dawe, one of the area’s former technology titans, who sold his own early internet business Unipalm in 1995 for £150m.

“At least SoftBank is one of the better people to buy [ARM] because they don’t already have a department they want to absorb it into. If it was Apple or another Silicon [Valley] manufacturer, they would just be buying the intellectual property and let the management and engineers wither on the vine.”

Hermann Hauser, another big name in the local technology firmament and a founder of ARM’s predecessor Acorn, was also disconsolate: “ARM is the proudest achievement of my life. The proposed sale to SoftBank is a sad day for me and for technology in Britain,” he tweeted.

He believed the takeover meant the “determination of what comes next for technology will not be decided in Britain any more but in Japan”.

However, Mike Lynch, who made £500m from selling his Autonomy business to Hewlett Packard five years ago, was more upbeat. “Yes, we have sold the family silver,” he said, “but it’s an amazing achievement to get what is effectively half the value of Intel” – one of the biggest global technology companies. “It reinforces the fact that you can do it here, in Cambridge.”

Unsurprisingly, Simon Segars, the chief executive of ARM, agreed with Lynch, saying the SoftBank acquisition was entirely positive because it will “accelerate our growth”.

It is certainly good personally for the chief technology officer, Mike Muller, whose stake is valued at £21m, and Segars, who joined ARM in 1991 as its 16th employee and whose shares are now worth £11m.

The Sussex University-educated electrical engineer, who once described ARM as “the least glamorous company in the FTSE”, said there was no question of ARM leaving its Cambridge home, where it is in the midst of a major new office construction project.

Segars said: “We are not going anywhere. We are the product of Cambridge roots, where our headquarters is, but it will remain a global company.”

SoftBank, whose operations cover telecoms, the internet and robot technology, has promised to double the UK workforce from 1,600 and keep that East Anglian base. Segars says these commitments will be nailed down in legal documents but he has no reason to believe these agreements would be broken – even if Brexit makes it harder to employ skilled European staff.

ARM is the third world-beating technology company in the past five years to be born in Cambridge and transfer to foreign parentage. The same fate befell Autonomy and CSR, while the smaller but hi-tech Domino Printing was sold last year to Japan too.

ARM is particularly significant because it is at the heart of the much-vaunted “internet of things”. Its self-designed microchips are used in 95% of smartphones, including iPhones, but also in TVs, drones and smart cars.

The controversial deal with SoftBank has certainly been an early test for the new Conservative government, which promised to block foreign takeovers if they harmed the public interest. This one was waved through, with Chancellor Philip Hammond quick to present the deal as a positive. It showed “that Britain has lost none of its allure to international investors,” he argued. “Britain is open for business – and open to foreign investment.”

But these are difficult days for Silicon Fen, whose leaders have complained that growth is being stifled by poor transport connections and insufficient housing. The chamber of commerce, university and local councils last year produced a “Case for Cambridge”, explaining “why urgent government action is needed if the city is to continue to thrive”.

Cambridge Science Park.

Employers boast there are 4,500 knowledge-intensive companies registered within 25 miles of Cambridge. This is producing annual employment growth of 7.4% – faster than China, they say. They want more than 35,000 houses to be built and investment poured into roads and rail to keep Cambridge up to speed with rival tech centres such as San Francisco and Boston.

Silicon Fen, named in honour of the Californian valley that spawned Apple, Google and others, has grown in the middle of what is still largely a farming region.

Once a sleepy market town with a major academic institution at its heart, Cambridge is now about computer technology and biosciences as well. Much of this new industry has been spun from the still world-leading university, which has produced 90 Nobel prizewinners in little more than a century.

The city is also home to a raft of internationally renowned science centres such as the MRC Laboratory for Molecular Biology, the Babraham Institute for immunology and the Wellcome Trust Sanger Institute for genomic research. Pharma giant AstraZeneca is building a huge new £330m headquarters next to Addenbrooke’s hospital on the Cambridge Biomedical Campus.

Overall, the city grandees believe that around 45,000 new jobs can be created and the government has offered a City Deal to put in place the transport infrastructure to cope. But moves to cut down trees and make fast busways have caused tension in the close-knit communities that make up the city.

Residents’ associations have accused the assembly that oversees the City Deal of prioritising the transport needs of employers over those of inhabitants.

Social justice groups say a huge rise in house prices is keeping key workers such as teachers and nurses out of the city. Those forced to live in nearby villages must join the queues of 87,000 cars a day commuting into the centre. And while the city council has a target of 40% of new housing being made “affordable”, the local paper has highlighted examples where developers have beaten this figure down to single-digit levels.

The fast economic growth of Cambridge has made it, in the eyes of its supporters, part of a “golden triangle” of success with Oxford and London. But some of the key problems – inequality, unaffordable housing and congested roads – are also replicated in all three cities.

The Cambridge Cluster has been built on attracting the best brains from around the world, and the Brexit vote has sent shockwaves through a city that voted overwhelmingly in favour of Remain.

Peter Williamson, honorary professor of international management at the university’s Judge Business School, said technology companies by necessity look worldwide and there were already signs that EU-funded research projects are nervous about including UK scientists.

“I don’t see anything positive and quite a lot negative about Brexit for the Cambridge Cluster. ARM never really had a UK customer base and always needed partners from overseas,” he said.

“ARM succeeded because it was born global.”

He also quibbled with the government’s idea that the deal somehow represented inward investment, and said any inability of SoftBank to attract new international staff to ARM could test its resolve to scale up in Britain.

Dawe – a Brexiter – sees it differently. “There may be short-term pain for university departments who have been subjugated by Brussels on research funding. But if we continue to look globally and have the right local management, Silicon Fen can grow faster and in a way that does not make local living conditions worse.”

But no doubt most Silicon Fenners would have agreed more with the sentiments of Hauser, who tweeted on referendum night: “An innumerate clown has wrecked a country ‪#Brexit”.

ARM’S HISTORY

ARM was founded in November 1990 as Advanced Risc Machines. It was a joint venture between Cambridge-based Acorn Computers, US giant Apple and its Silicon Valley sister, VLSI Technology.

Based in a converted barn in Cambridge, the ARM team created microprocessor chips that were used in Apple’s Newton device, the first handheld computer, which was a commercial flop.

But Newton showed small portable computers had potential. ARM chips went on to be utilised in a wide variety of smartphones, including Apple’s iPhone, and are now said to be used in about 95% of smartphones worldwide. From an estimated 9 million units in 1997, ARM’s partners shipped 15 billion chips last year. ARM now has nearly 4,000 employees working in 35 offices, from East Anglia to Silicon Valley to Shenzhen in China.

More on this story

More on this story

  • ARM shareholders approve SoftBank takeover

  • What incentive do SoftBank's advisers have to question ARM deal?

  • ARM sees profits grow 5% ahead of £24bn Softbank deal

  • ARM workers set to share nearly £400m if SoftBank deal goes through

  • Top two ARM executives share up to £55m payout after SoftBank takeover

  • ARM Holdings to be sold to Japan's SoftBank for £24bn

  • ARM: Britain's most successful tech company you've never heard of

  • Arm jumps 5% following Apple iPhone launch

  • Sprint to sell 70% stake to Japan's Softbank for $20bn

  • iPhone 5 sales: British supply firms set to benefit from Apple's success

Comments (…)

Sign in or create your Guardian account to join the discussion

Most viewed

Most viewed