SoftBank will acquire ARM for $32 billion

The acquisition would give SoftBank a strong presence in the smartphone and IoT markets

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Simon Segars, CEO of ARM, speaks at Mobile World Congress in Barcelona on Feb. 23, 2016. Credit: GSMA

Japan’s SoftBank will acquire UK chip design company ARM Holdings to cash in on growing demand for processors and other technologies for the internet of things and mobile markets.

SoftBank is paying £24.3 billion ($32 billion) in cash for the chip company that licenses its designs to a large number of chip suppliers to smartphone makers and to the emerging IoT market.

The Japanese company will retain ARM's headquarters in Cambridge and plans to double the number of employees in the U.K. over the next five years, when it will also increase the company's headcount outside the U.K.

ARM, with 4,064 employees,  will be an independent business within SoftBank, which will pay for the acquisition from existing cash resources and a loan. SoftBank said it intends to retain the current ARM organization including the existing senior management team, brand, and partnership-based business model and culture.

SoftBank has invested in a number of media and technology companies, including Internet retailer Snapdeal in India and ride-hailing app company Didi Chuxing in China. It also acquired Sprint Nextel in 2013.

The acquisition of ARM would place the company in a market where it would be an upstream supplier to some of the biggest names in the tech industry as licensees of ARM’s designs like Qualcomm gear up to supply chips to the connected devices market.

"ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the 'Internet of Things,'" said SoftBank chairman and CEO Masayoshi Son in a statement Monday.

ARM and partners have been looking at new opportunities in markets such as robotics, connected vehicles and smart cities. It recently acquired Apical, a provider of imaging and embedded computer vision technology for next-generation devices to understand and act intelligently on information from their environment. Apical's technology will complement the ARM Mali graphics, display and video processor roadmap, ARM said in May.

ARM has been successful in the small devices market, which requires low-power processors that consume far less battery than traditional microprocessors used in bigger gear like PCs, a market in which Intel has been dominant.

"ARM has long-term contracts with its customers so I wouldn't expect anything to change quickly, but all bets are off for the next-generation architecture," said Patrick Moorhead, president and principal analyst at Moor Insights & Strategies.  In the long-term SoftBank could restructure anything they wish and could invest more than ARM did to drive the enterprise products forward, he said. 

"This could ultimately impact mobile tech giants Apple, Qualcomm, and Samsung. I'm surprised ARM wasn't purchased sooner," Moorhead added.

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