Cambridge-headquartered ARM Holdings, whose chips power most of the world’s bestselling smartphones, is to be acquired by Japan’s SoftBank for £24.3bn as part of a big bet on the internet of things.
ARM, which was founded 25 years ago and employs 4,000 people, provides the advanced-system-on-a-chip processors that power devices like the iPhone and some of the most popular Android devices on the market, and competes vigorously against rivals like Qualcomm.
Fueled by the potential for the internet of things world of billions of connected devices, SoftBank is taking over ARM to accelerate its reach in this area.
Brexit made ARM share price attractive
The recent Brexit vote, which saw the UK voluntarily walk out of the EU, pushed the sterling to its lowest value in 30 years, no doubt making ARM an even more attractive target.
As well as smartphones, ARM’s graphic processing units (GPUs) are used in laptops and over 50pc of Android tablets.
ARM also competes against Intel and AMD in the server business.
Listed on the London FTSE and the New York NASDAQ, ARM’s share price has been flat for the past year.
If the acquisition by ARM is approved by SoftBank’s shareholders, it will be the Japanese investment firm’s biggest acquisition since acquiring US telecoms giant Sprint for $22bn in 2013.
ARM – which stands for Acorn Risk Machine – was founded in November 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology.
The company had originally been selected by Apple for the Newton project.
ARM kept its head down, designing GPUs, CPUs and SOCs for various technology manufacturers, and exploded into prominence when the smartphone revolution raged.
In 2015, the company shipped around 15bn chips worldwide, with around 50pc of these going into mobile devices.
As the chip industry begins to consolidate and regroup for opportunities around cloud and the internet of things, the acquisition by SoftBank will be seen as one of the transformative investments in the history of electronics.
CPU image via Shutterstock