Softbank to acquire Apple chip designing partner ARM for $32 billion
In a massive deal valued at $32 billion, Japanese company Softbank announced on Monday that it will acquire ARM Holdings, the company that designs specifications for low-power mobile processors, including the A-series chips found in Apple's iPhone and iPad.
The deal is moving forward with unanimous support from both Softbank's board of directors, as well as ARM's management team. U.K.-based ARM will sell for ?24 billion, with Softbank financing the deal through ?16.7 billion cash on hand and ?7.3 billion in the form of a loan.
Softbank also announced on Monday that it plans to double ARM's U.K. headcount over the next five years. It also intends to maintain ARM's neutrality and independence, which could suggest the deal won't affect ARM's ongoing relationship with Apple.
The agreed upon price is a premium of more than 40 percent over how investors had valued ARM prior to the announcement.
Apple's decision to use an ARM application processor, and not Intel chips, in the first iPhone in 2007 proved to be landmark decision that would shape the future of not only Apple, but the entire mobile industry. Since then, custom ARM-based designs have also been used to power the iPad, Apple TV and iPod touch.
In its announcement of the deal, Softbank touted not only ARM's profitability, but also its room for growth. In particular, Softbank said ARM processors have considerable opportunities to expand sales, particularly with "Internet of Things" connected devices, as well as the rapidly changing automotive industry.
ARM makes reference designs for low-power mobile processors. Apple takes ARM's chip knowhow and heavily customizes it to build its own unique A-series processors, with manufacturing duties handled by partners Samsung and Taiwan Semiconductor Manufacturing Company.
Apple's own chip designing prowess was kickstarted by the acquisition of silicon maker PA Semi for $278 million in 2008. The company's initial custom ARM System on a Chip, the A4 processor, debuted in the first-generation iPad in 2010.
The deal is moving forward with unanimous support from both Softbank's board of directors, as well as ARM's management team. U.K.-based ARM will sell for ?24 billion, with Softbank financing the deal through ?16.7 billion cash on hand and ?7.3 billion in the form of a loan.
Softbank also announced on Monday that it plans to double ARM's U.K. headcount over the next five years. It also intends to maintain ARM's neutrality and independence, which could suggest the deal won't affect ARM's ongoing relationship with Apple.
The agreed upon price is a premium of more than 40 percent over how investors had valued ARM prior to the announcement.
Apple's decision to use an ARM application processor, and not Intel chips, in the first iPhone in 2007 proved to be landmark decision that would shape the future of not only Apple, but the entire mobile industry. Since then, custom ARM-based designs have also been used to power the iPad, Apple TV and iPod touch.
In its announcement of the deal, Softbank touted not only ARM's profitability, but also its room for growth. In particular, Softbank said ARM processors have considerable opportunities to expand sales, particularly with "Internet of Things" connected devices, as well as the rapidly changing automotive industry.
ARM makes reference designs for low-power mobile processors. Apple takes ARM's chip knowhow and heavily customizes it to build its own unique A-series processors, with manufacturing duties handled by partners Samsung and Taiwan Semiconductor Manufacturing Company.
Apple's own chip designing prowess was kickstarted by the acquisition of silicon maker PA Semi for $278 million in 2008. The company's initial custom ARM System on a Chip, the A4 processor, debuted in the first-generation iPad in 2010.
Comments
2) Apple uses the Architectural license, which gives them the most control, but also requires the most of amount of work when designing a chip around ARM's instruction set architecture. You can't leave off the word architecture when referring to the instruction set, as it's the architecture of the instruction set—not just a list of instructions—that Apple is paying ARM a lot of money to get their hands on
Do you know how many billion of electrical outlets there are? It's absolutely imperative that these IoT devices are total power misers, or else we'll have to build power plants like crazy.
Always think: many small dogs also make a giant pile of poo.
What I could see happening is a home power plant which has DC power run a primary in-home battery pack to outlets so we can further reduce the need for PSUs to convert AC to DC for nearly all the current devices. This would have to be standardized with something like USB-C and only offer a pin setup for power unless there are other safeguards put in place.
If we can further the home's ability to use local, renewable energy, then the efficiency of power and reduction of waste could be furthered even more. I'd certainly like to live in a world where PSUs aren't required for every device used in the home.
2a) I wonder how this purchase will affect Apple.
2b) I've always wondered why Apple didn't purchase the company. Maybe I just wanted to complete some sentimental circle from Advanced RISC Machines Ltd (ARM) being created as a joint venture between Apple, Acorn, and VLSI back in 1990.
The UK is not alone and this might actually help UK workers if Softbank doubles ARM's "headcount over the next five years." I also don't see why Apple would want to spend all this money to buy out ARM because ARM comes with a lot of baggage (small chip stuff) that Apple really doesn't need to spend that money on. Of course, if they could purchase ARM with profits from sales outside the US, it would be very interesting especially with the EU out of the picture.
Clearly chip design is not even remotely your area of expertise so I'll explain it to you:
Apple licenses an instruction set known as ISA (Instruction Set Architecture) which is only a contract that says that if you compile your code to produce these instructions then the hardware will understand them.
In no way does the ISA enforce a certain implementation, you could implement it however you want.
Why did Apple choose this route? Simple: There are already a ton of compiler support (http://www.linaro.org/projects/armv8/) that can generate executables for ARM ISAs so no work on getting a compiler to generate the code.
Apple's chips are completely designed by them which is why you always see their chips kicking butt in single core tests.
So to finish: buy a license to an ISA, design your own chip so you can optimize it how you see fit, pay someone else to manufacture them.
Apple probably has what ARM calls a perpetual license which provides you with the rights to design and manufacture anything you want that is ARM-based perpetually, probably costs a nice and fat paycheck though.
http://forums.macrumors.com/threads/uk-chip-designer-arm-to-be-acquired-by-japans-softbank-for-31-4b.1983266/page-3#post-23134935
Nonetheless, it still doesn't change the dubious wording of this article. Apple and Qualcomm chips aren't "customized" (which implies modification from another source). They're designed from scratch.