SoftBank Bought ARM

$32 billion USD doesn’t buy as much as it used to. Unless you convert it into British Pounds, battered by the UK’s decision to leave the European Union, and make an offer for ARM Holdings. In that case, it will buy you our favorite fabless chip-design company.

The company putting up 32 Really Big Ones is Japan’s SoftBank, a diversified technology conglomerate. SoftBank is most visible as a mobile phone operator in Japan, but their business strategy lately has been latching on to emerging technology and making very good investments. (With the notable exception of purchasing the US’s Sprint Telecom, which they say is turning around.) Recently, they’ve focused on wireless and IoT. And now, they’re going to buy ARM.

We suspect that this won’t mean much for ARM in the long term. SoftBank isn’t a semiconductor firm, they just want a piece of the action. With the Japanese economy relatively stagnant, a strong Yen and a weak Pound, ARM became a bargain. (SoftBank said in a press release that the Brexit didn’t affect their decision, and that they would have bought ARM anyway. Still, you can’t blame them for waiting until after the vote, and the fallout, to make the purchase.) It certainly won’t hurt SoftBank’s robotics, IoT, or AI strategies to have a leading processor design firm in their stable, but we predict business as usual for those of us way downstream in the ARM ecosystem.

Thanks [Jaromir] for the tip!

44 thoughts on “SoftBank Bought ARM

  1. “a strong Yen and a weak Pound”, hackaday editing at its finest. Pound is over 100 times stronger than the yen, 1 British Pound equals 139.26 Japanese Yen, also currently equals 1.32 US Dollars or 1.2 Euros.
    Brexit didnt cause the pound to drop much, it may be its lowest level since 1981 but its still valued higher than most.

    1. Read what you quoted again. It’s not a direct comparison of value, but a statement of strength and weakness. If you look up the value of each compared to USD you’ll see the Yen has been gaining value this year and the Pound has fallen since the Brexit vote.

    2. I believe we have just reached a new level of how much bullshit can a comment hold. Explaining: “Strong” doesn’t mean a currency is worth more or less dollars, it means how “desired” the currency is; there is nothing to see with numbers.

  2. I am mildly worried about what this means for ARM-device in the future. I, of course, hope that they’d take a new direction and embrace open-source hacker-friendly platforms in a much more hands-on, we-love-you kind of a way, including open-source drivers for Mali GPUs, but I can’t help but fear that they’ll instead close things up even worse.

    1. Yep. With Freescale getting bought by NXP killing overlap products, and now Softbank buying the whole ARM enchilada, what’s next? I would start considering other options. Intel has been around for 48 years and is getting processors into IoT in a big way. That’s where we’re looking. YMMV.

  3. Here is hoping that Japan’s “Public Security Intelligence Agency” does not decide that tweaks for backdoor access are mandatory. * *
    * I realise that backdoor is not the primary function, but at least in theory it does makes that function easy to implement.

    But on the plus side, being fabless does mean that anyone licensing ARM designs does not mindlessly need to implement everything. But designs are very complex these days.

    1. Well, for ARM there is already TrustZone… no need to wait on PSIA, I assume it’s the obligatory rotation of symbolic flag/scapegoat-role for the next wave of people realizing this stuff is going on after the next whistleblower reveals what its used for…

      If a farmer sells a bag of potatoes to a buyer, what is the primary function of this event? To feed the buyer? Or to provide the farmer with liquid medium of exchange so he can get stuff to maintain his plot of potatoes? Primary functions are dependent on your role and interests…

      Lots of people think the issue is only about acquiring information (spying), but note that whoever controls the backdoor can perform actions on behalf of the user as well, to discredit an individual in a society which has some monitoring capability (say ISP logs, or even its own higher ring backdoors) but no direct access to these false bottom backdoors…

  4. The “battering” of the pound is, as one might expect in a global market place, irrelevant. The pound went from about 1.45 to 1.32 $dollars and the market cap of ARM Holdings nearly doubled under Brexit and the buyout news (the chart of the last month). Whoever sold ARM did very well. Up 42% today while the Pound is down from 1.45 to about 1.32. I did not check against Japanese yen. And who knows if they are buying with yen.

      1. basically what it used to be is that the exchange rate pound to yen wise was 190/180 yen to the pound[2015]. Then we Brexited all over our selves in public. in front of the world. and now its 139/145 yen to the pound[2016].

        so ($32@1.5 to the £[2015]) or 4047/4364 billion Yen
        is now ($32@1.32 to the £[2016]) or 3427.93 billion Yen @current exchange rate

        that’s a saving of 619/936 billion yen or $5.81/8.8 billion dollars. 2015 -> 2016

        so yeah that’s a bargain and a half.

    1. As I said elsewhere, the news tells me SoftBbank paid 40% over the share price at the time of the offer. Now offering 40% over the value is a damn good incentive. Although not if you really cared about a company.
      As to why they want it so much? Well everything has ARM so it is a nice monopolizing grab really.
      Problem though is that ARM got where it was by picking the right philosophy and making the right moves. With a new owner they probably won’t sustain that over the long run after which the purchase will be a waste after which they’ll try to rescue what they can by selling it again at a bargain I expect, to some investment bankers who tear it apart and sell the bits. Maybe they’ll make Fiorina do the tearing for them.

      But who knows, maybe they”ll keep it forever sitting on it, maybe they make it better (that’s highly unlikely IMHO), it’s hard to predict.

  5. Considering how terrible of a job Softbank has done with Sprint I can’t see this ending well. I hope ARM employees are not used to going to the bathroom whenever they need to or their attendance is going to suffer.

      1. Many private companies only allow craps at certain times of the day. Some go even further and time limit how long each crap is.

        Usually, this aligns with your breaks. However, if everyone in a large company takes their breaks at the same time, you don’t have enough time for your crap since everyone else is trying to use the crapper at the same time.

        This really becomes a problem if you have gut or urinary problems and have to visit the crapper more often than usual. Or for the females in the group, they get heavy menstrual flows. Pregnant woman also suffer. Goes the other way too with constipated individuals that have to sit on the throne for a while.

        A lot of companies are pushing towards this management of your asshole because way too many woman abuse their “womanly needs” to avoid work or shoot the shit in the restroom. A few people also abuse it by sitting on the throne and browing their smart phones or whatever.

        Not specifically picking on women, many men find bullshit excuses to hide out in the crapper for a while.

        Some public agencies are getting in hot water over this as well. The California DMV recently introduced policies governing when, how often and how long you can hit the crapper during work hours. Another public agency requires their employees to post where and how long they are at any given time of the day… yes, including when they visit the crapper. Call centers are notorious for controlling your bung hole. I quit one place that demanded you piss while wearing your headphones so you can handle incoming calls. Washing hands was not encouraged.

        If the U.S. is experiencing this, one can only imagine what the Japanese are doing given their strict work ethics.

        1. I imagine that in Japan people would just stop themselves from going to the toilet too much to not embarrass themselves or harm the company, they are a bit freakish like that I’m told. And if that’s true they would not need to make hard rules.
          Also you can just fire people that go sit on the crapper all day for no reason in the US can’t you? I mean if you are allowed to not have them go to the toilet then surely that is also allowed.

          I bet that trying to not allow people to go to the toilet except during breaks would fly into the human rights rules in the EU. And would not even get tried in the first place because the right of having unions are also legally protected.

    1. They would have offered more than the stock price Brexit or not. They offered 40+% because that’s what they were prepared to pay and Arm was willing to accept. The only Brexit related point is that the pound is weak vs. the yen so without Brexit they would have offered less £ over the stock price to pay the same amount of yen. They would have paid the same amount of yen regardless.

      This Brexit shit is starting to piss me off, nothing has happened yet. (I voted remain.) The real reaction will happen when article 50 is invoked and deals start/finish being negotiated. Until article 50 we’re still part of the EU.

      1. You are still part, but many companies need to look ahead and move operations for the EU realm to EU soil for effective management and tax reasons. So in that sense it’s already here because the vote was done and the result accepted.

  6. How do you foresee future CPU competition?

    Power efficiency is the key to both growth markets in mobile devices and servers. Internet-giants drive the market.

    But with a few big clients, it’s hard not to see an existential threat in a royalty-free option like RISC-V.

    1. I think we established that too little research was done for this article at this point.

      Thanks for the link BTW, interesting read, seems he’s thoroughly US-ified and once again an European country loses its only real technological asset to a foreign nation but to a company from a guy who has links to the US.
      At this rate Europe will forever be the US’s technological bitch if you will.

      (Had to edit EU into European, more brexit fallout)

      1. And look at how well Sprint fared? The ARM purchase is significantly out of their wheel house. I predict that they will go after some very big fish (market like data centers), fail, revenue drops, cherry pick survivors, fail some more, then sell ARM at a bargain in 3 to 5 years.

        1. ARM isn’t designed for data centers, and that company seems interested in the mobile and IoT aspect.
          Still though, I too won’t be surprised if they mess it up and it’ll break up ARM in the end.

  7. The temporary weakness in the Pound may have been a catalyst for Softbank buying Arm Holdings, but it isn’t the driving factor – cheap money is. You see, there’s a double-edged sword destroying our financial systems: Quantitative Easing (essentially printing money out of thin air and putting the burden of doing so on the taxpayer’s back), and Negative Interest Rates (paying the banks with taxpayer money to take the money you’re printing out of thin air). This practice of money printing and paying the banks to take this money results in too much cheap money floating around that undisciplined and greedy organizations will use to wreak eventual havoc. In exchange for this cheap money, the banks and greed-heads that take it kick-back money to the politicians so they’re allowed access.

    Expect NOTHING GOOD to come from this Softbank buy-out of ARM for anyone but a few select Executives and Political Elites. The rest of us will suffer.

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