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The U.K.'s opposition Labour party said this week that an Arm takeover is not in the public interest and criticized the ruling Conservative Party for failing to protect the British chip designer often hailed as one of the nation's most innovative firms from overseas predators.

Arm's chips are used by companies around the globe to power millions of electrical devices. Apple uses them in iPhones and iPads, while Amazon uses them in Kindles, and car manufacturers use them in vehicles. The company has 6,000 staff globally and 3,000 of those are in the U.K.

Ed Miliband, the shadow business secretary, warned that an Arm takeover by a Silicon Valley firm would ultimately lead to U.K. jobs moving overseas.

A government spokesperson said that Downing Street monitors proposed acquisitions closely. "Where we feel a takeover may represent a threat to the UK, the government will not hesitate to investigate the matter further, which could lead to conditions on the deal," they said.

Rumors have been swirling that U.S. chipmaker Nvidia is edging closer to buying Arm from current owner, SoftBank, which has allowed Arm to carry on independently since it acquired the firm in 2016 for 24 billion ($31 billion). SoftBank CEO Masayoshi Son confirmed in August that his company is considering selling or listing Arm.

Arm declined to comment and Nvidia did not immediately respond to CNBC's request for comment.

"Arm is a major British success story, but the government is doing nothing in the face of the risk of the company being swallowed up by Nvidia," Miliband said in a statement shared with CNBC.

"If the government truly believes in an active industrial policy, it cannot be right that they are ignoring the potential consequences of this takeover including the possible implications for where the company is headquartered and the thousands of jobs in Britain that depend on it."

Miliband also warned about the risks of putting too much power in one company's hands.

"We also know the tendency of dominance is a particular problem in the tech sector, and government must be much more vigilant about the risks of this," he said. "The government should show leadership and seek legally binding assurances from Nvidia should it take over the company to keep Arm headquartered in the UK rather than see jobs and decision-making moved across the ocean the same assurances that were made when Arm was taken over by Softbank in 2016."

Miliband's warning comes after several other British tech companies were acquired by larger companies overseas. One of the most notable examples in recent years is London artificial intelligence lab DeepMind, which was acquired by Google in 2016 for around $600 million. Today, DeepMind is widely regarded as one of world leaders in AI research.

The Labour party said there is a "worrying pattern of key British businesses in the vital technology sector being taken over by overseas interests."

Dominic Cummings, the chief advisor to U.K. Prime Minister Boris Johnson, emailed civil servants this week to confirm he is looking at ways to build $1 trillion U.K. tech firms, according to Business Insider.

Referring to DeepMind, Cummings wrote on his blog last March that the U.K. had a "valuable asset and let Google buy it for trivial money without the powers-that-be in Whitehall understanding its significance."

Elsewhere, U.K. network intelligence firm Imagination Technologies was taken over by China-owned investment firm Canyon Bridge in a 550 million deal in 2017. Nvidia itself bought the Bristol-headquartered Icera for $367 million in 2011 and subsequently sacked more than 300 staff in the U.K.in 2015.

Last month, The Evening Standard newspaper reported the deal between Nvidia and Arm was on course to be completed by the end of summer and that sources were valuing Arm at up to 40 billion.

The Labour party said the government should act when acquisitions can result in national assets being "stripped for parts" or shipped overseas. It said the government could do this by expanding the Enterprise Act to include a public interest test where a deal could implicate the U.K.'s industrial strategy.

Last month, Arm co-founder Hermann Hauser said an Arm sale to Nvidia would be a "disaster," pointing out that Arm's business model means it can currently sell to everybody.

"The one saving grace about Softbank was that it wasn't a chip company, and retained Arm's neutrality," he told the BBC. "If it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to Arm."

The Labour party said that if Arm is acquired by Nvidia, it would then be subject to the Committee on Foreign Investment in the United States regulations. That means President Donald Trump could choose which companies Arm can sell to outside the U.S.

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SoftBanks Arm sale hits a snag as UK opposition party warns of risk to jobs and digital sovereignty - CNBC