In the aftermath of last night stunning announcement that Japan’s Internet giant SoftBank (SFTBY) would acquire UK-based ARM Holdings (ARMH), a company which makes chips present in virtually every mobile and “connected” device, for $32 billion, sending the semiconductor sector surging, questions emerged why the company is doing this.
On one hand, even the founder of ARM Holdings himself, Hermann Hauser said, told the BBC he believes its imminent sale to Japanese technology giant Softbank is “a sad day for technology in Britain”. Hauser said the result of the Softbank deal meant the “determination of what comes next for technology will not be decided in Britain any more, but in Japan”.
On the other, the stock of SoftBank has tumbled now that the Japanese market has reopened after a one-day holiday.
Bloomberg gave the trivial answer first thing this morning in a piece titled ‘Why SoftBank Is Spending $32 Billion on U.K. Chip Designer ARM”, which concluded the following: “Softbank Chairman Masayoshi Son sees ARM’s future in being inside the legion of products that are becoming internet-connected, from street lamps to air conditioners, washing machines to drones — so-called “internet of things” devices.”
Perhaps. However, a more provocative explanation has emerged courtesy of SouthBay Research, which when looking at the same deal, asks if China (yes China) “just acquired the most important company in the world? “
Here is SouthBay Research’s explanation why:
ARM Holdings (ARMH) holds the keys to the future of electronics. That’s not hyberbole.
Not only does ARMH dominate the world of mobile devices, it is rapidly penetrating all electronics: from consumer electronics to the computer network.
ARMH designs and licenses semiconductors.Their designs are the core of the critical components of consumer electronics: smartphones, tablets, TVs, and so on. For example, most of today’s tablets and phones run on Qualcomm chips: they did $26B in sales last year. These chips re-package ARMH designs.
