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15 July, 2020 - 10:59 By Tony Quested

Arm sale on cards as SoftBank fights for cash

Cambridge’s greatest ever technology business – superchip architect Arm – may be put up for sale by Japanese owner SoftBank just four years after it paid $32 billion to acquire the company.

Goldman Sachs has been tasked with exploring the alternatives but only two options would appear to be viable in SoftBank’s dash for cash – a total sale of the Cambridge company or a partial sale wrapped round an IPO.

SoftBank took Arm off the UK stock market after the original acquisition. Arm officials are referring all Press enquiries to SoftBank.

In global markets crippled by COVID-driven paranoia it may be that SoftBank comes to its senses and realises that keeping Arm represents its best hope of building a financial revival.

But the next move could be all down to desperation: In May, an earnings report outlined SoftBank losses that were the largest on record for any listed Japanese company.

As the New York Times also reported, SoftBank posted an operating loss of 1.36 trillion yen, or $12.7 billion, in the year to March 31, its first annual loss in 15 years. It reported a profit of $19.6 billion the previous year. Its net income loss was $894 million.

SoftBank had already announced a major restructuring,. As part of that process, ARM is set to to transfer two of its Internet of Things (IoT) businesses to SoftBank, subject to board approval. SoftBank would then directly oversee those divisions. 

Arm told Business Weekly that the move was strategic and designed to promote improved growth and profitability.

A spokesperson added: “If the proposed transfer is completed we will deepen our focus on our core semiconductor IP business and accelerate the returns on our investments in client, infrastructure, automotive and embedded/IoT devices. We are not sharing any additional details or commenting on future plans at this time.”

Business Weekly has recently reported a number of new technologies developed within these core categories which will be directed from Arm’s massively expanded Cambridge headquarters. Arm’s IP across these segments is huge and global and it has leading international players leveraging the enhanced technology.

Arm was sold to SoftBank for $32 billion in September 2016 and CEO Simon Segars believes the newly announced strategic pivot will significantly enhance the bottom line.

He said: “Softbank's experience in managing fast-growing, early-stage businesses would enable the IoT Services Group to maximise its value in capturing the data opportunity.

“ARM would be in a stronger position to innovate in our core IP roadmap and provide our partners with greater support to capture the expanding opportunities for compute solutions across a range of markets.”

ARM expects to complete the switch before the end of September and I understand it intends to continue collaborating with the divisions moving to SoftBank control after the handover.

To date, Arm partners have shipped more than 160 billion Arm-based chips, and an average of more than 22 billion over the past three years. The great irony of the current situation is that SoftBank acquired Arm to build on its leadership in all things IoT. That capability has never been lost  – then companies in financial straits seldom plan logically or strategically.

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