UK chip maker ARM Holdings has been bought by Softbank, a Japanese technology firm. The £24bn deal was confirmed today.
ARM Holdings is a chip designer whose products are used in smartphones – 16 billion of them in 2015. Its products are seen across handsets from the likes of Apple and Samsung, and in chipsets from top name firm Qualcomm.
But it isn’t with smartphones that the potential for growth lies. That is to be found with the burgeoning world of the Internet of Things (IoT). Its expertise in chip manufacture makes ARM Holdings a key strategic buy for an organisation with an eye on the IoT, and gives Japanese telecoms giant Softbank a strong foothold in a technology area that is set to take off in a big way.
Analyst Gartner said earlier this year that more than half of major new business processes would incorporate some element of the Internet of Things by 2020, and 43 percent or organisations are using or plan to implement IoT this year. That’s an awful lot of processing power needed in the immediate, and near future.
ARM buy signals commitment to UK base
Softbank is headquartered in Tokyo, but according to information released by ARM Holdings, it intends to maintain the ARM headquarters in Cambridge, UK, at least double the employee headcount in the UK over the next five years, and at the same time increase the headcount of ARM outside the UK over the next five years.
There are also no plans to alter the senior management structure of ARM Holdings, which will remain an independent business within Softbank. This suggests that Softbank intends to leave ARM Holdings free to do what it does best, in the way it has been accustomed to working.
IoB spoke to Steffen Sorrell, senior analyst at Juniper Research, who told us “This is a very valuable acquisition for Softbank considering ARM’s leading position in the low power corner of the market.
“Royalties from embedded units now account for 38 percent of royalty revenue, and rising – in 2012 this was only 26 percent. The sheer projected volume of connected IoT (Internet of Things) units highlights how important this embedded sector will be, although Softbank should be careful not to increase customer costs, where the proliferation of IoT devices is predicated on low-cost hardware. For Softbank, that will mean leaving the business model largely untouched.”