Last year NVIDIA, a global leader in artificial intelligence (AI), made headlines around the world when it agreed to purchase Arm for $40 billion, marking the largest deal ever in the semiconductor industry. This history-making deal is a remarkable investment in our talent and the UK that will grow our leadership in AI, the most important technology trend today.

You’ve probably heard a lot about semiconductors (or chips) recently. Whether it’s news about the historic demand for chips, geopolitical battles casting a shadow over the industry, or even automobile shortages – this industry is suddenly a topic of conversation around the world.

That’s because chips have become an essential part of everyday life; they’re what make our devices intelligent. Silicon chips allow our TVs to connect to the Internet to stream on-demand movies, thermostats to adjust themselves to minimize energy usage in our homes and cars to tell us if someone is in our blind spot.

And if there’s one device we can’t live without it’s our mobile phone. In 1997 only 20 percent of UK households had access to one; today more than 95 percent of households own at least one.

AI will be the most important technology for the next 50 years

Arm technology is a key part of the hardware “brain” of many of these chips. We’re not a chip company, but we create designs that we license to semiconductor companies around the world. Our products are used by over 500 licensees to power the intelligence of billions of smart devices globally across living rooms, classrooms, factories and hospitals. The smartphone has been the defining product of the last decade and it has been built on Arm processors.

But technology moves fast. We are now entering the age of AI and it’s clear that AI will be the most important technology for the next 50 years. Whether it’s used by automakers to develop self-driving cars or by medical researchers to accelerate the discovery of life-changing medicine, AI is set to become ubiquitous.

Throughout Arm’s history we have focused on low power, high-performance processors that have supported a broad range of our customers’ designs, where ensuring long battery life is essential. This model has been extraordinarily successful for us, especially in mobile.

AI will be fundamentally different. The world’s AI leaders will provide new technologies and tools that are highly specialized, with discrete software and systems for scientific computing, healthcare and many other industries.

Under our current owner, SoftBank, we have invested heavily in new chip technologies which allowed us to enter new markets such as 5G networks and cloud computing. But that work was only a beginning and won’t be enough for us to fulfill our ambitions. To lead in AI, Arm will need to expand our scope, expand our business and invest in new technologies.

Combining Arm’s expertise with NVIDIA’s AI leadership

NVIDIA is the perfect complement to Arm. Combining our expertise with NVIDIA’s AI leadership will give Arm’s UK-based engineers access to technology and resources that Arm alone would not have. NVIDIA’s considerable investment in both the UK and Arm will expand our roadmap of research and development and allow us to invest in and grow our UK-based talent. Our engineers will be able to adapt and enhance NVIDIA’s AI technologies for our customers, create new UK-origin intellectual property and grow Arm’s influence in the technology sector.

There’s been a lot of ill-informed speculation out there about what the future of Arm with NVIDIA will look like.  Some believe that an initial public offering (IPO) would have been a better path. Others are concerned that Arm will leave the UK, while some have fears that Arm will become anti-competitive. These assumptions couldn’t be further from the truth and I’d like to address them head-on.

The combination of Arm and NVIDIA is a better outcome than an IPO. The level of investment that will be needed to lead in AI will be unprecedented. We’ve been down this road before when we predicted a major market shift in 2016. We knew that we needed to invest heavily in our products, talent, and technology to take advantage of the opportunities ahead. The initial investments came when SoftBank acquired Arm; it enabled us to build new technologies that expanded our reach into data centers, the automotive and networking industries, all while retaining our leadership in mobile.

Now is the time for us to take our scale to the next level to address the technology challenges ahead. We contemplated an IPO but determined that the pressure to deliver short-term revenue growth and profitability would suffocate our ability to invest, expand, move fast and innovate. Combining with NVIDIA will give us the scale, resources and agility needed to maximize the opportunities ahead. This deal is the best opportunity for Arm and our customers and will enable the UK to be a meaningful industry player in the age of AI.

Expanding opportunities for Arm customers

Arm will remain headquartered in the UK and we will be able to increase our investment in UK-based talent. The UK is already recognized as one of the leaders of AI research and academia; together with NVIDIA we have the ambition to evolve the UK into the centre of the AI world.

NVIDIA will not siphon investment away from the UK. Instead, it will invest in the expansion of Arm’s Cambridge HQ and build a world-class AI research facility. At its heart will be one of the world’s most powerful supercomputers, powered by Arm technology will enable scientists, engineers and researchers to conduct ground-breaking work that will accelerate the growth of the local and international ecosystem. The combination of Arm’s technology with NVIDIA’s deep expertise in AI will make the UK the leader in research, innovation and scientific discovery for decades to come.

Arm and NVIDIA will expand opportunities for Arm’s customers and remain committed to our open-licensing business model. Over the course of 30 years, Arm has grown from a small team of 12 founding engineers in a barn outside of Cambridge to become a global leader, having established an industry standard that serves the entire semiconductor industry.

An economic and commercial necessity for Arm’s business

We have built the value of our company through our open-licensing business model which ensures our customers around the world all have access to the same Arm technology.

This is an economic and commercial necessity for Arm’s business, and simple common sense. Arm and NVIDIA rely heavily on others throughout the industry so continuation of our open licensing model is not just the best option, it is the only one.

We’ll invest with NVIDIA to create new markets, not displace customers in existing ones. This transaction opens up access to even more innovation that the entire semiconductor industry can harness to create the technologies that will make cars safer on the road, accelerate the development of life-saving medical technologies, power the automated systems that will make our return to in-person offices safer and revolutionize education for our nation’s youth.

Arm is without doubt one of the UK’s best technology success stories. I have built my career here and I am incredibly proud of what we have achieved. Our impact is huge in the world of technology and semiconductors; this deal ensures that our legacy continues and thrives in the world of AI.

Combining with NVIDIA will give us the scale and the resources necessary to address the complexity of next-generation technology that no other path can. This is an exciting prospect and I firmly believe this represents the best future for our company and to ensure that the UK stays at the forefront of the next 30 years of computing.