Softbank to acquire Apple chip designing partner ARM for $32 billion

In a massive deal valued at $32 billion, Japanese company Softbank announced on Monday that it will acquire ARM Holdings, the company that designs specifications for low-power mobile processors, including the A-series chips found in Apple's iPhone and iPad.

The deal is moving forward with unanimous support from both Softbank's board of directors, as well as ARM's management team. U.K.-based ARM will sell for Â£24 billion, with Softbank financing the deal through Â£16.7 billion cash on hand and Â£7.3 billion in the form of a loan.

Softbank also announced on Monday that it plans to double ARM's U.K. headcount over the next five years. It also intends to maintain ARM's neutrality and independence, which could suggest the deal won't affect ARM's ongoing relationship with Apple.

The agreed upon price is a premium of more than 40 percent over how investors had valued ARM prior to the announcement.

Apple's decision to use an ARM application processor, and not Intel chips, in the first iPhone in 2007 proved to be landmark decision that would shape the future of not only Apple, but the entire mobile industry. Since then, custom ARM-based designs have also been used to power the iPad, Apple TV and iPod touch.

In its announcement of the deal, Softbank touted not only ARM's profitability, but also its room for growth. In particular, Softbank said ARM processors have considerable opportunities to expand sales, particularly with "Internet of Things" connected devices, as well as the rapidly changing automotive industry.

ARM makes reference designs for low-power mobile processors. Apple takes ARM's chip knowhow and heavily customizes it to build its own unique A-series processors, with manufacturing duties handled by partners Samsung and Taiwan Semiconductor Manufacturing Company.

Apple's own chip designing prowess was kickstarted by the acquisition of silicon maker PA Semi for $278 million in 2008. The company's initial custom ARM System on a Chip, the A4 processor, debuted in the first-generation iPad in 2010.

25 Comments

stantheman 11 Years · 332 comments

About 8 years ago

Wow! That's a high price to pay for a 'mature' business. Cars and many IoT devices will not be as energy-starved as smartphones, so the ARM advantage will be less important in the future than heretofore. Second, Apple inking its recent deal with Intel (for modems) cannot be a positive development for ARM, either. Intel will continue working on a chip that can replace the ARM processors in iPhone, and now Intel has an opportunity to work with Apple engineers on an ongoing basis.

awilliams87 11 Years · 264 comments

"Apple takes ARM's chip knowhow and heavily customizes it to build its own unique A-series processors" Apple doesn't use ARM reference designs; The A-series aren't "heavily customized" processors based on "ARM's chip[s]." They're Apple's own design. Only the instruction set is ARM.

Soli 9 Years · 9981 comments

awilliams87 said:

"Apple takes ARM's chip knowhow and heavily customizes it to build its own unique A-series processors" Apple doesn't use ARM reference designs; The A-series aren't "heavily customized" processors based on "ARM's chip[s]." They're Apple's own design. Only the instruction set is ARM.

1) Reference designs is what ARM licenses. All of ARM's licenses refer to designs.

2) Apple uses the Architectural license, which gives them the most control, but also requires the most of amount of work when designing a chip around ARM's instruction set architecture. You can't leave off the word architecture when referring to the instruction set, as it's the architecture of the instruction set—not just a list of instructions—that Apple is paying ARM a lot of money to get their hands on

http://www.anandtech.com/show/7112/the-arm-diaries-part-1-how-arms-business-model-works/3
http://infocenter.arm.com/help/index.jsp?topic=/com.arm.doc.den0024a/CJHECGIH.html

rcfa 17 Years · 1123 comments

stantheman said:

Cars and many IoT devices will not be as energy-starved as smartphones, so the ARM advantage will be less important in the future than heretofore.

In the contrary: low power isn't just about battery life, it's about environmental impact and cost: can you imagine a future in which each power outlet in your home has a built in computer with an IPv6 stack and a RESTful XMLRPC API to control it, read out power consumption, etc?
Do you know how many billion of electrical outlets there are? It's absolutely imperative that these IoT devices are total power misers, or else we'll have to build power plants like crazy.
Always think: many small dogs also make a giant pile of poo.