SoftBank To Acquire ARM For $32 Billion

Megalith

Megalith

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British chip maker ARM was approached with a deal they couldn’t refuse. Japanese company SoftBank now owns the mobile industry leader with “an unassailable library of IP processor designs” and will get royalties every time companies such as Samsung and Apple adopts its designs.

SoftBank Group Corp. agreed to buy ARM Holdings Plc for 24.3 billion pounds ($32 billion), securing a slice of virtually every mobile computing gadget on the planet and future connected devices in the home. The Japanese company is offering 1,700 pence in cash per share or a 43 percent premium to Friday’s close, according to a statement Monday. The deal would be the biggest-ever for SoftBank, which under Chief Executive Officer Masayoshi Son became one of Japan’s most acquisitive companies with stakes in wireless carrier Sprint Corp. and Alibaba Group Holding Ltd.
 
Wow, I can't see this but anything but terrible for the smartphone industry. Softbank is one of those giant corporations that doesn't care very much about the bottom line as much as they do crushing their competition. If it costs them a $200 million dollar contract to devastate a competitor, they'll do it.
 
Quix said:
Wow, I can't see this but anything but terrible for the smartphone industry. Softbank is one of those giant corporations that doesn't care very much about the bottom line as much as they do crushing their competition. If it costs them a $200 million dollar contract to devastate a competitor, they'll do it.
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Yeah they sure destroyed Verizon, AT&T and T-Mobile with Sprint...oh wait.
 
Maybe the ARM guys saw some Kaby Lake specs and decided to cash out. Or whatever the new low power chip tech is called from Intel.
 
I don't understand this purchase for such a high price. ARM sells around a billion pounds a year. The margins are high, but they won't make that money back for forever. And the high-margin markets are already saturated, so ARM's future growth is limited.

Those patents better be worth ten billion pounds on their own, or this is yet-another pointless purchase.
 
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defaultluser said:
I don't understand this purchase for such a high price. ARM sells around a billion pounds a year. The margins are high, but they won't make that money back for forever. And the high-margin markets are already saturated, so ARM's future growth is limited.

Those patents better be worth ten billion pounds on their own, or this is yet-another pointless purchase.
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They effectively own the rights to the CPU/SOC in every smartphone ever made.
 
-Strelok- said:
Yeah they sure destroyed Verizon, AT&T and T-Mobile with Sprint...oh wait.
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Verizon, AT&T, T-Mobile are dependant on Sprint for core technology their networks are based on?

That comparison doesn't make any sense at all.
 
defaultluser said:
I don't understand this purchase for such a high price. ARM sells around a billion pounds a year. The margins are high, but they won't make that money back for forever. And the high-margin markets are already saturated, so ARM's future growth is limited.

Those patents better be worth ten billion pounds on their own, or this is yet-another pointless purchase.
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He's betting on IOT devices becoming popular.

Skripka said:
I wonder if they'll do to ARM what they did for Sprint?
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Can't really save a company from itself. With all the money spent, lost value and juggling done over the past 4 years it was going to take a miracle to fix that.
 
Still is a pretty new space with room to grow. We're just now getting to the second generation of products in that space. It definitely isn't a risky move but at least it's better than his deal with Sprint which was basically 3-4 years too late.
 
Quix said:
Verizon, AT&T, T-Mobile are dependant on Sprint for core technology their networks are based on?

That comparison doesn't make any sense at all.
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You said they want to crush their competitors, not me. They bought Sprint and haven't done anything to Verizon, AT&T or T-Mobile. Doesn't seem like they are very good at crushing their competition.
 
defaultluser said:
I don't understand this purchase for such a high price. ARM sells around a billion pounds a year. The margins are high, but they won't make that money back for forever. And the high-margin markets are already saturated, so ARM's future growth is limited.

Those patents better be worth ten billion pounds on their own, or this is yet-another pointless purchase.
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you mean its not a bargain like whatsapp for 19 billion?
I thought 32b for the key elements of the biggest or second biggest architecture is a bargain.
Im surprised intel didnt buy them.
I dont know about intel low power.. pretty sure its all been a loss.
 
Uvaman2 said:
you mean its not a bargain like whatsapp for 19 billion?
I thought 32b for the key elements of the biggest or second biggest architecture is a bargain.
Im surprised intel didnt buy them.
I dont know about intel low power.. pretty sure its all been a loss.
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I doubt that Intel would be allowed to buy them just from a monopoly standpoint. But that's pure supposition.
 
Japan needs to up their portfolio for all that negative interest that is happening in the country. Abeconomics is not doing so hot over there.
 
defaultluser said:
I don't understand this purchase for such a high price. ARM sells around a billion pounds a year. The margins are high, but they won't make that money back for forever. And the high-margin markets are already saturated, so ARM's future growth is limited.

Those patents better be worth ten billion pounds on their own, or this is yet-another pointless purchase.
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ARM's royalty rates are still at incredibly low levels on their IP. Softbank could reasonably increase the royalty $1-2 per chip and rake in another 500-1000m per year just in the smart phone segment without any impact on the market. ARM makes typically <$1 per smartphone SOC and roughly 80% of the average smartphone SOC is ARM IP. It would be perfectly reasonable for softbank to plan to capture more of the platform value. The smartphone industry has basically handed ARM a monopoly and Softbank could easily exploit that to massively increase net profit from their ARM subsidiary.
 
Quix said:
Verizon, AT&T, T-Mobile are dependant on Sprint for core technology their networks are based on?

That comparison doesn't make any sense at all.
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ok I'll bite, how do you figure that Verizon, AT&T, and T-Mobile are dependent on Sprint for "core technology" their networks are based on?
 
FLECOM said:
ok I'll bite, how do you figure that Verizon, AT&T, and T-Mobile are dependent on Sprint for "core technology" their networks are based on?
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Sprint is owned by SoftBank.

Softbank now owns ARM.

Every smartphone uses an ARM SOC.

Qualcomm (Snapdragon), Apple (A#), MediaTek, Samsung (Exynos), Allwinner, nVidia (Tegra), etc... are all ARM licensees.

Realistically, if ARM were to become tainted somehow... Everybody, and I mean everybody, would have to switch to a different architecture. Intel abandoned the phone space and what's left isn't nearly powerful enough.
 
rat said:
Sprint is owned by SoftBank.

Softbank now owns ARM.

Every smartphone uses an ARM SOC.

Qualcomm (Snapdragon), Apple (A#), MediaTek, Samsung (Exynos), Allwinner, nVidia (Tegra), etc... are all ARM licensees.

Realistically, if ARM were to become tainted somehow... Everybody, and I mean everybody, would have to switch to a different architecture. Intel abandoned the phone space and what's left isn't nearly powerful enough.
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I'm gonna assume they can't just yank that ARM license from any of them for quite some time, and there is no way they would be able to destroy the entire mobile market without someone suing them.
 
Basically what Strelok said. You have no clue what you're talking about aaronspink.

You price the cores too high, and more companies build their own. You already have big players like Qualcomm and Apple, smaller players like Broadcom and Cavium, and Samsung is expected to follow shortly.

ARM Challenging Intel in the Server Market: An Overview

Samsung's Exynos 8 Octa Mobile Chip Will Feature a Custom ARM Core

You price the architectural license in the clouds, and people will leave you. Qualcomm, Apple AND Samsung have vastly more money than ARM does, and can afford a port to whatever is cheaper (MIPS?). Apple isn't even attached to the Android system, so they could leave tomorrow.

The current royalty rates are well-balanced to fuel the Chinese chip makers like Rockchip, who produce mass quantities of off-the-shelf ARM cores. You kill that price point with higher royalties, you kill the only growth segment left in the smart phone market.

So, you'd lose the high-end, high-margin cores (A72) to custom cores already out there, and you'd lose the low-margin, high-volume business as well. HOW IS THIS A SMART MOVE?

So again, make the case that ARM has anywhere to grow revenues besides the IoT business it''s weak in?
 
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rat said:
Sprint is owned by SoftBank.

Softbank now owns ARM.

Every smartphone uses an ARM SOC.

Qualcomm (Snapdragon), Apple (A#), MediaTek, Samsung (Exynos), Allwinner, nVidia (Tegra), etc... are all ARM licensees.

Realistically, if ARM were to become tainted somehow... Everybody, and I mean everybody, would have to switch to a different architecture. Intel abandoned the phone space and what's left isn't nearly powerful enough.
Click to expand...

there is no way that will ever happen... zero chance
 
FLECOM said:
there is no way that will ever happen... zero chance
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True, but with time, patience, there is no reason why they can extract some more profit, even develop things further. ARM is quite mature, no reason not to I think.
Yes, they can be stupid and slowly destroy it, that is for sure.
 
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