Hermann Hauser, former Acorn Computers employee who founded Arm Holdings

The row over Chinese firm Huawei will be 'incredibly damaging' for Arm, the founder of the British technology giant has claimed.

Cambridge-based computer chip designer Arm has been forced to suspend business with Huawei after President Trump placed the Chinese company on a US 'banned entity' list amid security concerns.

It followed a similar move by Google and others as American companies that count Huawei as a client severed ties following the President's clampdown.

Arm, whose chips are used in Huawei's smartphones and servers for data centres, was sold to Japanese investment giant SoftBank for £24billion in 2016 in the largest ever deal for a British technology company.

Arm is affected by the new restrictions because of the number of components used in its chips that are designed in the US.

Hermann Hauser - an icon in the computer industry who co-founded Arm when it was spun out of Acorn Computers - told The Mail on Sunday it would have an 'absolutely enormous' impact on Arm.

He claimed other customers would start limiting their exposure to products that contain technology which originated in the US, such as Arm products.

'It really is quite damaging for Huawei in the short term, and longterm it's going to be incredibly damaging for Arm and Google and the American industry,' he said.

'Every single supplier in the world will start thinking of how to reduce the threat of their production being terminated by an American president. All the discussions I have with companies in Europe at the moment are about them going through their intellectual property portfolio and designing American intellectual property out, which is terribly sad and destructive.'

He said that included Arm. 'Most of Arm's intellectual property was created in Europe, but some of it, without thinking, we created in the US. Many Arm products have American intellectual property in them - Arm had to follow the instructions of the American president,' the 70-year-old added.

Hauser, who is now co-founder and venture partner of technology start-up investor Amadeus Capital, said it was 'not an acceptable position to be in for a non-American company'.

Arm Holdings was bought by Japanese investment giant SoftBank in 2016. SoftBank pledged to keep Arm based in Cambridge as part of the takeover

Arm is owned by Japanese tech investment giant SoftBank, which is run by eccentric billionaire Masayoshi Son. However, as part of the takeover, SoftBank pledged to keep Arm's headquarters in Cambridge and increase the workforce in the UK.

Hauser added: 'If America can stop a Chinese company, of course they can stop any other company in the world. By exercising this incredible power they have over other companies, all the companies in the world are now thinking: "Do I want to be in a position where the American president can shut me down?" When I talk to people in the industry, they are being very careful about not buying American products.'

Critics fear Huawei's equipment could be used by the Chinese state for spying. The company denies this and also denies having close links with the Chinese government. Supporters of the firm argue America is using Huawei as a pawn in its trade war with China.

The British Government has reportedly approved the use of Huawei equipment in 'non-core' areas of the 5G network such as antennae. A subsequent row and leak from a top-level meeting led to the sacking of Gavin Williamson from his defence post.

Last week, EE became the first mobile operator in the UK to launch 5G by rolling out the next generation data network in six cities. Vodafone has confirmed it will launch 5G in July.

Neither EE nor Vodafone is including Huawei smartphones in their 5G launches due to the row.

A spokesman for Arm said: 'Given the evolving nature of the situation, it's premature at this point to forecast what impact it will have on Arm's business. We are watching the situation very closely, engaging in dialogue with policymakers, and hoping for a swift resolution.'