When returning to his alma mater Cambridge University in 1928, Chinese poet Xu Zhimo wrote his famous poem Saying Farewell to Cambridge Again, in which he evoked the lush scenery along the winding Cam River. “Looking for dreams? Push a punt, to where the grass is greener still upstream,” the poem goes.

The area around Cambridge was marshy back then, which is why the city is often mockingly called “Silicon Fen” today, in allusion to its American rival Silicon Valley.

It is 9:30 a.m. as Mike Muller, one of the founders and CTO of Advanced RISC Machine (ARM) Holdings, arrives at the ARM headquarters riding his bicycle. A seasoned biker, Muller smoothly rolls into the adjoining parking lot, which is already packed with parked bicycles. An empty plot next door is currently being prepared for the construction of a new R&D building.

Muller commutes to work by bike every day. Cambridge has seen a string of large-scale public works projects in recent years. Against this backdrop, biking to work is probably the wisest decision one can make.

Upon graduation from the Computer Laboratory at the University of Cambridge in 1977, Muller worked at two other Cambridge-based computer companies before founding ARM with eleven colleagues. He has spent his entire career in Cambridge. “I am very lazy, but you could also say I’ve been lucky,” he jokes. Having started a business in Cambridge, he has never wanted to leave the city.

ARM was founded in the 1990s, during the golden era of the personal computer. Back then, Britain and continental Europe did not have semiconductor plants, and Silicon Valley was driving global technological innovation.

"Cambridge feels like in the middle of nowhere,” remarks Muller in a display of British black humor. Based on what business textbooks teach, launching a business in Cambridge should be considered crazy, Muller says.

Over the past 25 years, ARM developed from a small, obscure company with a handful of employees on the outskirts of the university city into a global powerhouse. As many as 85 percent of smartphones run on processors with ARM architecture. Thanks to its licensing model, ARM today is one of the “hidden champions” of the British technology industry. With the rise of the Internet of Things (IoT) in recent years, ARM quickly grabbed 30 percent of the IoT-related product market worldwide.

No Smartphone without ARM Architecture

The Guardian has called ARM “Britain’s most successful tech company you've never heard of.” “It has fingers in almost every other area of technology, from fitness trackers to server farms…and goes a long way to helping justify the “Silicon Fen” label sometimes applied to Cambridge’s tech scene,” the paper wrote.

For Muller, who lives in Cambridge, the city has nurtured him and the company. With its rise, ARM wrote a chapter in Cambridge’s history as an important influencer of global technology development.

But ARM, for its part, was spun off from Acorn Computers, a computer company that massively influenced British electronic engineering during the entire 1980s.

In the early 1980s, Bill Gates and Steve Jobs founded Microsoft and Apple in the United States. In 1979, Britain’s ITV broadcast the documentary series The Mighty Micro about the budding microcomputer revolution. In response, the BBC launched its Computer Literacy Project to popularize the use of home computers across the nation, built around a 10-part television series called The Computer Program. The BBC asked Acorn to develop a microcomputer for release alongside the TV series. Three years later, some 80 percent of British schools had a BBC Micro.

“Even now, it happens that young engineers who come for an interview tell me at the end that they used a BBC Micro when they were little," Muller says.

Acorn, however, found it difficult to get a foot into markets outside of Britain since IBM personal computers had already become the industry standard. Amid these difficulties, processor technology emerged as a new line of business for the company.

At the time, Apple wanted to develop the Newton PDA. In hindsight, we could say that this product of the early 1990s was the world’s earliest tablet computer. Apple originally first cooperated with U.S. telecommunications giant AT&T on the development of microprocessors, but they were not able to solve the problem of excessive power consumption. When the launch date of the product had to be pushed back, Apple turned to Acorn in Cambridge for help.

Muller points out that Apple came knocking on Acorn’s door because “We had the processor technology Apple was looking for.” Computer makers Acorn and Apple were competitors to a certain degree. Since Apple could hardly use a chip designed by a competitor, the solution was to jointly found a new company, recounts Muller, who was involved in designing the Newton PDA processor.

Twelve technical engineers, including Muller, who had been in charge of processor architecture at Acorn, formally co-founded ARM as a result.

At the time, global processor suppliers such as Intel both designed and manufactured microchips. A popular saying in the industry was that “only real men have fabs.”

Since ARM was not large enough to support manufacturing, it adopted a licensing business model. The chipmakers were allowed to freely use ARM’s design, but once their products reached mass production, ARM charged licensing fees.

At the time, the licensing business model was a novelty in the industry. Somewhat naively, the dozen engineers decided to take the risk. They set up their offices in a refurbished granary from the 18th century. They all acted as boss, employee and handyman at once, installing telephone lines and doing other menial work themselves until they had earned enough licensing fees to afford hiring more people.

“We were more conservative,” recalls Muller with a smile. They turned every penny over twice before spending it since they had only 100,000 pounds (about NT$4.8 million) in start capital.

ARM’s business truly took off with the mobile age, when demand for low power consumption processors spiraled. This was largely due to the adoption of the ARM processor architecture by Finnish mobile phone maker Nokia. It was foreseeable that once industry leader Nokia switched to ARM, other mobile phone makers would follow suit. Last year, ARM celebrated its 25th anniversary. Worldwide, 75 billion ARM processors have been shipped, which means more than 90 percent of all smartphones in the world have “ARM inside”.

In the beginning, no one would have believed that this small company at the fringe of the global technology spectrum and far away from Silicon Valley would be able to survive in Britain's service industry-oriented market.

As ARM CEO Simon Segars explains, it was for this reason that the company adopted a global strategy from day one, establishing global partnerships. As ARM’s 16th employee, Segars spends very little time in Cambridge, frequently flying back and forth between Asia, the United States and Europe. He also came to Taiwan a few years ago when ARM expanded its R&D presence in Taiwan with the launch of the Hsinchu Design Center in the Hsinchu Science Park, in close proximity to cooperation partner Taiwan Semiconductor Manufacturing Company (TSMC).

That Segars keeps jetting around the globe probably owes to the fact that ARM is based in Cambridge and not in Silicon Valley. Consequently, ARM has no other choice but to go out into the world and seek alliances with other companies to ensure that its services are needed.

Tech Nation 2016, a report on Britain’s digital tech economy by innovation charity Nesta and Tech City UK, gave Cambridge the highest score of all 27 tech clusters in Britain in terms of “international collaboration.”

The reasons are not difficult to understand. After all, the University of Cambridge, with its intellectual freedom and rigorous academic requirements, has produced 92 Nobel Prize laureates, high-caliber talent and advanced technologies. Collaboration between academia and industry has enticed many international companies to set up shop here or to acquire local tech enterprises.

The Cambridge Spirit – Stepping out from Day One

The university remains at the core of the Cambridge tech cluster and continues to rank at the top internationally. The University Innovation Ecosystem Benchmark project concluded that “Three universities, MIT (U.S.), Stanford University (U.S.), and the University of Cambridge (UK), well known for ground-breaking research, teaching, and inventions that impact our daily life, stand out within the two hundred top universities identified by innovation thought leaders.”

The entrance of the William Gates Building, which houses the Computer Laboratory, features the alphabetically listed names of spinoff technology firms that have been founded by staff and graduates. The lab has spawned some 240 companies to date.

“You will find ARM under the letter A, and SwiftKey, which has recently been bought up by Microsoft, is also there,” remarks Chris Doran, ARM director research collaborations and entrepreneur in residence.

The just-completed Maxwell Centre, located a few hundred meters west of the university campus, will serve as a platform for research collaborations. The center will give companies even more direct access to the cutting-edge technologies being developed at the university’s science and engineering departments, be it materials, optical or computer science.

Doran points out that it is through academia-industry collaboration that the university has expanded its influence far into the tech economy.

While the university encourages the founding of startups, international companies also scout Cambridge for “golden brains.” Claire Ruskin, CEO of the Cambridge Network, which fosters collaboration and partnerships between academia, businesses and individuals, has been witnessing this phenomenon first hand.  

Turkish home appliances maker Arçelik, for instance, has opened an R&D center in Cambridge. “They chose to establish an R&D center in Cambridge for technology collaboration with the University of Cambridge and to conduct advanced materials research,” notes Ruskin, who assisted Arçelik in setting up shop in the Cambridge Science Park.

Microsoft Research, which collaborated with the Computer Laboratory early on, continues its partnership to date. Other Internet giants such as Google and Amazon also maintain a presence in Cambridge. Most recently, Apple Inc. arrived, acquiring artificial intelligence startup VocalIQ Ltd. which specializes in human speech recognition. The offices of VocalIQ, also a university spin-off, are located at the end of Station Road, which directly leads to Cambridge railway station.

Chinese companies are also staking out a claim to Cambridge’s vibrant tech cluster. Information and communications technology firm Huawei, which already maintains an R&D center in the Cambridge Science Park, is on the lookout for promising startups. Ruskin reveals that Huawei keeps asking around whether there are companies that are looking for a buyer.

The Cambridge tech cluster now counts more than 4,300 companies, including local startups and enterprises from elsewhere in Britain or abroad, according to statistics by the University of Cambridge. As a result, high-caliber talent is a hot commodity. On the Cambridge Network alone, some 1,500 jobs wait to be filled, reveals Ruskin.

Many professionals, such as lawyers and business consultants, commute to Cambridge from London, which is just 40 minutes away by train. Every morning, long lines form in front of the station building as commuters wait for taxis to take them to their workplace. On empty plots of land opposite of the station, large-scale office building construction projects are under way.

Xu Zhimo’s picturesque Cambridge has already adopted a more business-like face. Today’s Cambridge acts as the driving force behind Britain’s transformation into a digital technology powerhouse. Do the locals have misgivings about the city’s rapid development; do they yearn for its placid past?

“If you look at the bright side, Cambridge has advanced technology; it has arts and literature, it is a cluster that blends technology and humanities,” remarks Doran in highlighting the city’s unique advantage. For the same reason, ARM has kept its roots in Cambridge while conquering the world with its products during the past 25 years. Cambridge boasts the tradition that it takes to build the future.

Translated from the Chinese by Susanne Ganz