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SoftBank To Buy British Chip Designer ARM For $32 Billion (cnet.com)

Posted by msmash on from the big-money dept.

SoftBank has agreed to acquire British chip designer ARM Holdings for $32 billion in cash. The purchase will give Japan's multinational telecommunications and Internet corporation a slice of virtually every mobile computing gadget on the planet and future connected devices in the home. ARM, unlike Intel, doesn't manufacture chips, but licenses the design for it. ARM customers shipped roughly 15 billion products with ARM chips inside in 2015. This also marks the first large-scale, cross-border transaction in Britain since it voted to exit the European Union last month. "I have admired this company for over ten years," SoftBank Chief Executive Officer Masayoshi Son told reporters at a press conference in London on Monday. "This is an endorsement into the view of the future of the U.K."

ARM assumes the tentpole position in chips for mobile devices. It was one of the first companies to aggressively focus on mobile devices while other semiconductor companies were ramping up their efforts on desktops. SoftBank, which is based in Tokyo has become one of the most acquisitive companies in the recent years. It heavily invests in technology, media, and telecommunications companies. ARM could provide an additional boost to SoftBank's mobile strategy. SoftBank, for instance, also owns about 83 percent of the American wireless operator Sprint.
Hermann Hauser, one of ARM's founders, said, "ARM is the proudest achievement of my life. The proposed sale to SoftBank is a sad day for me and for technology in Britain." BBC's Rory Cellan-Jones asked, "Question -- if ARM goes, what's left as a worldbeating UK-owned tech player?"

29 of 153 comments (clear)

  1. Result of brexit? by NotInHere · · Score: 4, Interesting

    Did they use the cheap pound to shop a british company?

    1. Re:Result of brexit? by Anonymous Coward · · Score: 5, Informative

      No, TFA says that because most of ARM's revenue is in US$, its stock went up after the vote and it got more expensive for Softbank.

    2. Re:Result of brexit? by JDeane · · Score: 5, Interesting

      Maybe, but more importantly in my opinion what they plan to do with this, if they handle it correctly it's a great investment ARM CPU's are in a LOT of devices and if they can keep innovating they will be in many more and upgrades. If they just sit on it trying to collect money, Intel will eventually figure out how to make it's portable CPU's even better and eventually take the market. (Not that Intel's SoC's are bad now)

      Either way the next few years should prove interesting and we can use hindsight to see what they had in mind.

    3. Re:Result of brexit? by Feral+Nerd · · Score: 3, Interesting

      Did they use the cheap pound to shop a british company?

      Just days ago May made a stirring speech where she said No. 10 should be anle to step in if foreigners tried to buy companies important to British communities and workers. Now, apparently, No. 10 approved the sale to demonstrate conclusively that: "...the UK can make a success of leaving the EU". If making a success of Brexit means selling the UK high tech sector off to Asia in bits and pieces we are all going to have to re-examine our definition of 'success'.

    4. Re:Result of brexit? by Anubis+IV · · Score: 4, Informative

      Uh, no.

      The stock went up because of what Softbank offered, not the other way around.

      Actually, uh, yes, the stock went up exactly for the reason AC said, as well as for the reason you said. From the article:

      In fact, [SoftBank CEO Masayoshi Son] said because ARM’s sales are mostly to customers in the U.S. and Asia, and are largely dollar-denominated, its stock has risen about 15 percent since the EU referendum vote. That means the deal actually became more expensive for SoftBank because of Brexit, not cheaper, he said.

      ARM's valuation went up 15% after Brexit according to the article (just as AC said), and went up an additional 43% after news of the acquisition broke (just as you said), taking them to the price reported in the summary. The two are not mutually exclusive.

    5. Re:Result of brexit? by Kohath · · Score: 2

      Intel has been trying this for many years. They never succeed because Intel is trying to make chips so Intel can sell chips for phones and tablets. Intel is Intel-focused. If they focused on making chips to solve problems for customers, they might be more successful.

      Microsoft has the same problem. Windows 8 and Xbox One were very obviously Microsoft-focused products -- customers didn't want tiles or Kinect or HDMI input.

      Memo to Intel and Microsoft: don't make stuff you want to sell, make stuff people want to buy.

    6. Re:Result of brexit? by Anonymous Coward · · Score: 2, Insightful

      Arm wins in the mobile space not because of technology but because of business model.

      With ARM you can get ready made off the shelf chips or semi-customized chips base off off the shelf models. You can lisence processor blocks from ARM and other 3rd party vendors and have your own custom chip fabricated or you can license the low level tech and make your own entirely from scratch - You can then fabricate it yourself or have one or multiple third parties fabricate it.(Like apple does) - You can get arm chips however you like, for as cheap or as expensive as you like. - Do it yourself or pick from dozens of vendors.

      With Intel? Well, Intel makes a crazy powerful chip that sips power.. But you only get the small handful of models Intel makes, and you can only get them from Intel. (And thus you are at Intel's mercy)

      Turns out that for the mobile market ARM's business model works better.

    7. Re:Result of brexit? by TheSync · · Score: 2

      ARM is probably the last major tech company we have... I can't really think of any British ones left.

      BAE Systems has 107,000 employees, and Rolls-Royce Holdings has 55,500 employees. Not fully tech but highly tech oriented.

      Sky employs 22,800 folks, and keep in mind it is not just a satellite TV platform but also an ISP and OTT provider.

  2. Re:Who? by Big+Hairy+Ian · · Score: 4, Funny

    So long Acorn and thanks for all the chips

    --

    Build a Man a Fire, and He'll Be Warm for a Day. Set a Man on Fire, and He'll Be Warm for the Rest of His Life.

  3. what about Intel and M$ by known_coward_69 · · Score: 2

    any chance of $100 CPU's and 20GB OS images making it in the IoT world?

    1. Re:what about Intel and M$ by Richard_at_work · · Score: 3, Informative

      Microsoft already has Windows 10 IoT Edition, which runs on the Raspberry Pi 2 & 3, and other small systems.

  4. Re:Who? by Richard_at_work · · Score: 2, Informative

    ARM Holdings doesnt make processors, they license designs - other people make the processors and improve the designs.

  5. Re:Who? by RogueyWon · · Score: 3, Interesting

    Could be worse, they could have been bought out by a Chinese chicken-supplier.

    Softbank may not be well known to the Western public, but it is at least an institution with a genuine track-record and a long-standing interest in the tech sector. Some of these Chinese acquisitions recently feel like attempts to manipulate China's tax or criminal codes and I worry for the future of the companies which have been acquired.

  6. Who wants to buy Acorn RISC Machines? by The+Evil+Atheist · · Score: 2

    It's a little bit RISCy...

    --
    Those who do not learn from commit history are doomed to regress it.
  7. Re:Who? by RabidReindeer · · Score: 2

    Could be worse, they could have been bought out by a Chinese chicken-supplier.

    Fun Fact: WiPro, the famous Indian software outsourcer, gets its name from its origins: The West India Produce Company.

  8. Re:Who? by Nemyst · · Score: 2

    SoftBank are the owners of Sprint and Supercell (developers of Clash of Clans, an absurdly successful mobile game), among other things. They're a very big Japanese corporation with tentacles in various areas, primarily telecommunications.

  9. Re:Who? by DarthVain · · Score: 2

    I was thinking about the same thing. Also with the valuation of 32 Billion, not chump change for any type of company. Apparently they own 83% of sprint (and who knows what else), so who knows what companies own what now a days...

    Though a quick wikipedia shows they are basically a cell phone provider in Japan who brought Apple there, so go figure they have lots of cash. With revenue of almost a trillion US dollars (9.15 Trillion Yen)...

    Kinda make you wonder why Apple didn't do this first really.

  10. Re:Who owned ARM before? by Ash-Fox · · Score: 2

    Acorn computers.

    --
    Change is certain; progress is not obligatory.
  11. Brainless politicians by Wowsers · · Score: 2

    As I type, the new British Prime Minister has applauded the deal of ARM being bought by foreigners. She doesn't have a maths degree, so it must be really difficult for her to understand all profits now will no longer boost UK GDP, but instead boost Japan's GDP. In UK, the man who setup ARM, some of the press / political commentators and economists attacking the deal, but the politicians know best. At least the bosses of ARM get very rich from the deal.

    --
    Take Nobody's Word For It.
    1. Re:Brainless politicians by gtall · · Score: 2

      How do you figure? All of ARM shareholders were Brits? Most are big institutional investors. Britain will see squat from this except a shallow husk of a company in a few years time when Softbank screws the pooch.

    2. Re:Brainless politicians by Blue+Stone · · Score: 2

      The Tories are more than happy to sell out everything in the UK to foreign businesses and countries. They're little more than 'lucrative business opportunity arrangers'. (To be fair this applied the the Blairite neoliberals as well).

      They portray themselves to the general public as the most patriotic, but they're really only loyal to the rich and the corporations that have the cash to give them nice consultancy fees and board memberships. Even our public services are owned and exploited by foreign corportions as well as the nationalised industries of other countries who take the profits abroad to subsidise their own country's services.

      These jokers allowed Cadbury's to be sold off to Kraft (well, their parent company) with "promises" of jobs remaining once the sale went through. Nothing written down; sale went through; it was 'merely an aspiration to keep the uk factory open'.

      They don't give a shit. Someone will scratch their back later on. They're happy for the UK to be little more than a client state for foreign businesses.

      --
      Corporation, n. An ingenious device for obtaining individual profit without individual responsibility. - Ambrose Bierce
    3. Re:Brainless politicians by TheSync · · Score: 2

      She doesn't have a maths degree, so it must be really difficult for her to understand all profits now will no longer boost UK GDP, but instead boost Japan's GDP

      I don't think you have an economics degree.

      If a multinational produces income in the UK, it is counted in UK GDP statistics regardless of country of ownership. If profits from that production is exported back to another country, those profits are subtracted from GNP, not GDP.

      I don't know where ARM licenses are billed to, but they have operations all over the world, and "Management periodically evaluates individual positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities" (i.e. they shop for the jurisdiction with the lowest corporate tax rate to recognize income where they can get away with it).

      Moreover, "The benefit of UK research and development is recognized under the UK's Research and Development Expenditure Credit (RDEC) scheme" and "In 2013, a decision to elect into the UK patent box regime was made. The UK patent box regime seeks to tax all profits attributable to patented technology at a reduced rate of 10%." (source).

  12. Re:Globalism strikes again by Ash-Fox · · Score: 2

    What major companies are left in the UK?

    Some of them include Ineos, Greenergy, John Lewis Partnership, Stemcor, Swire, Palmer and Harvey, McLaren Technology Group, Laing O'Rourke, Brakes Group, JCB, Arcadia Group, Virgin Atlantic, Premium Technologies, Firstsource, European Metal Recycling, Iceland Ltd, Bestway Group, Arnold Clark Automobiles, Shop Direct Group, TI Automotive, Acromas Holdings, SSP, Thames Water, Dixons Carphone, MRH, Wilkinson, Pentland Group, Specsavers, New Look, Anglian Water, Clarks, 2 Sisters Food Group, Iglo, United Biscuits, Bibby Line, AMC, 20:20 Mobile, Enterprise, Findus, Matalan, Gala Coral Group, Balli Holdings, Mott MacDonald, Linpac, Unipart, Willmott Dixon, River Island, Wates, Marshall Group, Vita, Healthcare at Home, Arup, William Grant, Kelda Group, Westcoast, KCA Deutag, Merlin Entertainments, Mace, AF Blakemore & Son, Just Retirement, Partnership, Dyson, Moto, Biffa, Watson Petroleum, Arqiva, Northgate Information Solutions, Bourne Leisure, Martin McColl, Virgin Trains, Sir Robert McAlpine, Greenhous Group, Monarch Holdings, UK Fuels, Doncasters, Samworth Brothers, Formula One, Odeon & UCI, TJ Morris, John Laing, B&M Retail, Bowmer & Kirkland, Dunbia, Telereal Trillium, OCS Group, Northern & Shell Media Group, Travelex, House of Fraser, Keepmoat, Spire Healthcare, Bloor Holdings, Monsoon, Southern Water, Listers, Poundland, DFS, Welcome Break, Asco, Harrods Group, JCT600 and Hannover Acceptances.

    Why do you ask?

    --
    Change is certain; progress is not obligatory.
  13. Softbank by sjbe · · Score: 4, Informative

    Company I've never heard of buys most important processor company in the world. Wow.

    Softbank is one of the 100 largest companies in the world. You not knowing them speaks more to your ignorance of Japan than anything else. They've been a big player in the tech world for decades.

    And Intel might disagree about who is the most important processor company in the world though ARM certainly has an argument for the title. ARM is king of the hill in mobile devices but changes are you typed your posting on a device with an Intel microprocessor. Which is more important? Guess that depends on your point of view.

  14. Meanwhile in ARM's Cambridge HQ by TechyImmigrant · · Score: 5, Funny

    The Softbank CEO walk in and asks "So where are your factories?"

    --
    I should use this sig to advertise my book ISBN-13 : 978-1501515132.
    1. Re:Meanwhile in ARM's Cambridge HQ by Junta · · Score: 4, Insightful

      The sad things is that businesses by and large *hate* any hardware portion of a business. So they're perfectly happy to have a pure IP company that licenses out to companies that in turn are generally *also* fabless. The more they 'saddle' some other sap with the capital intensive business of building and moving real physical goods, the happier they are.

      --
      XML is like violence. If it doesn't solve the problem, use more.
  15. Re:Strange Move by gtall · · Score: 2

    They are hoping to hit another homerun like they did with Ali Baba in China. Softbank figures they will own the IoT world. I expect what will happen is they will get greedy, hike licensing fees, treat the intellectual capital as labor that can be done anywhere and destroy their investment. Their noise about doubling the British workforce is just that, noise. They make that noise to get idiot Brit lawmakers thinking they should not throw up roadblocks to selling out one of Britain's best tech companies. I am not optimistic this will end well for ARM.

  16. Re:Who? by slew · · Score: 3, Informative

    I get the impression that it's kind of like the Verizon of Japan, except maybe with an even larger market share. I believe they own Sprint in the U.S., too.

    Like Yahoo, Softbank appears to be valued most by it's Alibaba holdings. The market value of the shares of it's top 5 holdings is worth $22B more than the market value of the company. Interesting, they recently purchased Sprint for about $22B... But unlike Yahoo, Softbank's own telecom business is actually profitable...

    Apparently, they recently sold off some of their Alibaba holdings (~5% of 32% for +$9B) and all of SuperCell (70% +$8B) to help finance this ARM acquisition, but most observers believe it will almost certainly require taking on more debt given the amount of cash on hand...

    As a result, the shares of Sprint have been impacted as it looks like they won't get all the cash infusion they need to turn around their business...

  17. What's left by ItsJustAPseudonym · · Score: 2

    ...if ARM goes, what's left as a worldbeating UK-owned tech player?

    At least you've got TopGear.
    Um, nevermind.