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Business Management

Unpredictable Softbank chances its ARM on IoT with acquisition

The just announced £23.3bn ($30.9bn) deal that will see the remarkable UK microprocessor designer ARM Holdings become part of the Japanese Softbank empire is intriguing and represents something of a gamble for both parties.

Softbank is a wide-ranging conglomerate that in recent years has centred its attentions on telecoms but it also retains interests in Alibaba, Yahoo and in software and device distribution. The company is distinctive in its non-conservative approach to business strategy and its CEO Masayoshi Son is a mercurial figure fond of making bold moves into new sectors. (As a disclaimer, I worked for the US publishing group Ziff-Davis when Softbank acquired it in 1995/1996. On a visit to the UK Son told staff of his plans to create 1,000 titles – a wide swing away from Ziff’s focus on niche techie titles. Instead, he sold Ziff’s publishing business in 2000 after taking it public.)

ARM, with roots in Cambridge dating back to the 1970s, has achieved enormous success in recent years through its low-power chip designs that today power everything from smartphones to servers and appear to be a very good fit for the Internet of Things. The projected growth in IoT has seen rapid consolidation in the chips sector and helps explain Softbank’s move.

Does the combination make sense? Perhaps, if ARM can make use of the global scale, funding and access afforded by Softbank. But elements of the deal beg questions. One of them surrounds plans to create at least 1,500 new jobs in the UK. As a company that makes its money through silicon design – a high-margin, low-overheads sector - will these new ARM jobs be sustainable?

Another is on the timing of the news, coming as it does in the immediate aftermath of the UK’s referendum decision to leave the EU. Is this a positive or negative sign for the future of the country’s business sector? The incoming Chancellor Philip Hammond has hailed it as a deal to “turn this great British phenomenon into a global phenomenon”. Some would say that ARM is already a global force and had no great need of Softbank’s assets.

 

Also read:

Can tech save a post-Brexit UK?

E-voting might have saved UK from Brexit

Brexit vote is a blow to the UK’s tech brains

Data expert: Brexit referendum is on a razor’s edge

InfoSec 2016: GDPR hangs heavy over Europe

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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