3 things to know about Softbank's plan to acquire ARM

It won't affect the iPhone, but it'll speed up technology development and lead to cheaper chips

Since the release of the iPhone, ARM's chip designs have driven a mobile revolution. The small chip company has brought giants like Intel to their knees in the realm of mobile phones and tablets, and now it's on the verge of being acquired by Softbank for a stunning US$32 billion.

You may not know it, but outside of PCs ARM is in almost every device we use, from smartphones to TVs to home appliances. It licenses chip designs to manufacturers, and over the last 25 years, over 90 billion ARM-designed chips have gone into devices. ARM will continue designing processors for various segments of the computing industry after the acquisition, but investments will go up and product development will be faster, said Simon Segars, CEO of ARM, in a video. Here are three immediate things you need to know about the deal.

Your iPhone or iPad won't be affected

Apple's A-series smartphone chips for the iPhone and iPad are based on ARM architecture. Apple will look at the proposed acquisition closely with regard to their mobile chip future, but it will likely retain ARM architecture. For ARM, Apple has been a marquee customer that can highlight the chip architecture's capabilities. But Apple also has nowhere else to go now that Intel -- which was ARM's major mobile competitor -- has quit making mobile processors. An alternative is the struggling MIPS architecture, whose owner, Imagination Technologies, is reportedly up for sale, but it's doubtful Apple would make that choice.

ARM processor designs are also in smartphones from top vendors like Samsung, LG and others. None of them should be affected by the deal.

"I'm not expecting any changes because many of their contracts are long-term, tied to specific architectures and products," said Patrick Moorhead, principal analyst at Moor Insights and Strategy.

Faster technology development, and cheaper chips and devices

After the acquisition, ARM CEO Segars said the company "will do more, we'll do it faster, and we'll do it with a greater degree of investment." That's bad news for Intel, which will suddenly have to contend with a chip company with big financial backing. That competition could lead to faster chip development and cheaper processors, like what happened for PCs and servers when competition between Intel and AMD was at its peak. A big reason Softbank acquired ARM was to expand in the internet of things; Intel laid off 12,000 employees to refocus on IoT and data center products.

Cheaper chips could bring down prices for IoT devices and servers, said Jim McGregor, principal analyst at Tirias Research. ARM could also scale up development of wireless modems and sensor technology and add much-needed resources to chase servers, a market Intel dominates, McGregor said.

ARM has tried to avoid PCs, a market that is declining. But its chip designs are being used in maker boards like Raspberry Pi and BeagleBone.

No Brexit effect

Softbank is a Japanese company, but ARM's operations will remain centered in the U.K. The chip designer has 1,600 employees in the U.K., and it will double that head count over the next five years. That's a show of faith in the U.K., which has voted to exit the European Union and has recently suffered currency fluctuations. ARM will also expand operations worldwide after the acquisition, and will be hiring in other countries. ARM has big operations in U.S., China and Taiwan.

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Agam Shah

IDG News Service
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