SoftBank to take on Intel in IoT with £24.3bn ARM Holdings deal

ARM Holdings has recommended to shareholders that they accept a £24.3 billion acquisition bid from Japanese conglomerate SoftBank, which could attract enough further investment to help it square off against Intel in the internet of things (IoT) and data centre markets.

“SoftBank is taking ARM private, effectively, which I think is very interesting,” 451 Research founder John Abbott tells Computerworld UK. “ARM’s prospects have always been really big but when you look at the actual company it’s still quite small – under a billion dollar revenue last year, around only 3,000 staff – so it’s really underinvested for the position it has in the market.”

ARM Holdings is one of the most prevalent chip companies in the world. It licenses out its core designs to other businesses, and it’s estimated that the business has sold 90 billion chips in its 25 years.

“That’s huge, but a lot of those are very low value,” Abbott explains. “Its licensing model, where it just licenses the core and expects licensees really to do more investment and to add value, means it doesn’t actually get huge amounts of revenue from some of these sales despite its dominant position.”

ARM was founded in 1990 and is currently based in the ‘Cambridge cluster’, where a number of silicon and other technology businesses are located. The company has a heritage in providing the chips for set top boxes and other appliances, but it really proliferated during the smartphone boom thanks in part to the low-power designs of its technology.

The proposed acquisition would double ARM’s employees in the UK over the next five years, SoftBank says, and the deal has been welcomed by Britain’s new chancellor, Philip Hammond.