Four years after swallowing Arm Holdings, SoftBank said to be mulling Brit chip biz sale
- Reference: 1594734495
- News link: https://www.theregister.co.uk/2020/07/14/softbank_considering_arm_sale_report/
- Source link:
Reports [2]citing internal sources claimed SoftBank is considering a full or partial sale. Goldman Sachs is said to be advising.
Founded in 1990, Arm Holdings designs the power-sipping chipsets used by the majority of smartphones. As Arm chips have closed the performance gap with Intel's x86 architecture, Arm's silicon has started to appear on server, desktop, and laptop computers. Most recently, Apple announced it would start switching Mac computers [3]to its own homegrown Arm-based Apple Silicon .
Since acquiring Arm Holdings in the months following the Brexit referendum in summer 2016, SoftBank has gradually chipped away (sorry) at the business, [4]selling a majority stake in Arm China to a local investment group for $775.2m.
Softbank also [5]flogged a quarter of the main business to the Saudi Vision Fund for £6.5bn.
In recent months, whispers in Silicon Valley have suggested that SoftBank may raise money by taking Arm Holdings public, with an IPO mooted for 2023.
Talk of future directions comes during a period of turmoil for SoftBank, which has faced huge losses in its Vision Fund venture capital vehicle. This is partially due to its sizeable stake in WeWork, which, prior to its abortive IPO attempt, was valued at $47bn before crashing to $2.9bn.
SoftBank CEO Masayoshi Son has since described the firm's WeWork investment as "foolish".
In addition to WeWork, Softbank's Vision Fund also holds stakes in Zume (a robotics firm which initially existed as an automated pizza delivery firm, before shifting to more conventional fare) and perennially loss-making ridesharing firm Uber.
Its most valuable holding is its stake in Alibaba; in May the group said it would raise $11.5bn from contracts to sell shares in its holding. Alibaba co-founder Jack Ma retired from SoftBank's board in June.
Just last month SoftBank most recently sold a significant portion of [6]its investment in T-Mobile US, raising $14.8bn from the sale of 198 million shares.
SoftBank's reported eagerness to shift Arm Holdings may be more fundamental than its current financial woes. Speaking to The Register , one company insider said SoftBank was dissatisfied with Arm's business model and wanted it to charge more for royalties.
As a "fabless" semiconductor firm, Arm doesn't actually make any chips itself, but grants other firms – like Qualcomm and MediaTek – the right to produce its designs under licence. ®
Get our [7]Tech Resources
[1] https://www.theregister.com/2016/07/18/softbank_to_buy_arm_holdings_say_reports/
[2] https://www.wsj.com/articles/softbank-explores-options-for-chip-designer-arm-holdings-11594672437
[3] https://www.theregister.com/2020/06/23/apple_armed_for_x86_rebellion/
[4] https://www.theregister.com/2018/06/06/softbank_offloads_51_per_cent_of_arm_china_for_a_bargain_7752m/
[5] https://www.theregister.com/2017/03/08/quarter_arm_sold_saudi_investment_fund_reports/
[6] https://www.theregister.com/2020/06/17/softbank_to_divest_tmobile/
[7] https://whitepapers.theregister.com/
Just a simple off by 1000 error
Here’s a thought - UK.gov to purchase
How about UK Gov renationalising ARM in the security, military and national interest? Same “national interest” stuff like excluding Huawei from 5G.
Was joking but bet you BAe etc would never have been sold off!
Re: Here’s a thought - UK.gov to purchase
How about UK Gov renationalising ARM
ARM was never nationalised, so can't be renationalised.
Re: Here’s a thought - UK.gov to purchase
Maybe he meant repatriated?
Re: Here’s a thought - UK.gov to purchase
I'm not sure ARM was ever "patriated" in the first place, so can it be repatriated? Just following the prior conviction that ARM was never nationalized, so it can't be re-nationalized.
(Just trying to see whether we can peg the pedantry meter in this thread.)
Re: Here’s a thought - UK.gov to purchase
Ah! I love the smell of pedantry in the morning.
Still, you are right and got an upvote.
Re: Here’s a thought - UK.gov to purchase
Nationalising it would probably kill it, but some type of "golden share" arrangement to prevent it being sold off to a foreign buyer might be a good idea.
Re: Here’s a thought - UK.gov to purchase
Arm should never have been sold to a non UK peep in the first place. If the uk gov has any sense at all (*) would repatriate it. And you could extend that sentiment to a boat-load odd other tech industry, starting with the now sadly long lost Inmos.
(*) Oh hang on - I’m seeing a flaw in my plan
Re: Here’s a thought - UK.gov to purchase
It does much of its work abroad anyway. But a management buyout supported by a government load might fit the bill.
Re: Here’s a thought - UK.gov to purchase
Reptriation and nationalisation. Good call. And that's why the computer industry is dominated by British giants like ICL
Re: Here’s a thought - UK.gov to purchase
The chance to do that was a couple of years ago. SoftBank now owns ARM and has already made sure that it controls all the relevant IP.
This kind of flip was always going to happen. The SNAFU of the "Vision Fund" has only brought forward the date. A bidding war is probably preferable to an IPO for SoftBank but difficult to think who could really buy the company without being ruled out over competition grounds. Maybe do a deal with a collection of the sovereign wealth funds?
Re: Here’s a thought - UK.gov to purchase
Top priority - rad hard chips for OneWeb. I like it.
Now, who can uk.gov buy to roll out ARM based 5G infrastructure? Hey, that gives me a new business idea....
Just a thought
I'm sure I'm not the only one here who's thinking 'What if Apple bought ARM?'...
Would they restrict the latest designs to their own hardware?
Would they restrict who they licensed the designs to?
Would they actually be interested?
V.
Re: Just a thought
The monopolies people would have a heart attack
Generally IP deals for something like ARM already have clauses for this. So if Apple buys ARM, Samsung get to keep their current licenses for ever - for free. Otherwise nobody would ever buy into any platform with the risk that it could be bought by a competitor
Everyone benefits from ARM being something of an industry standard, you get cheaper tools and cheaper more experienced people than if ARM was an internal product of company X.
Ironically no. One of the problems with ARM's business model is that you have to keep the IP license cost at 0.00001$ below what it would cost customers to just invent their own instruction set or switch to something like RISC-V. Most of Apple's secret sauce is in making the SOC and it's own based-on-ARM cores. Buying ARM (even if it could) to save on the license fee wouldn't be worth it.
Re: Just a thought
I am sure there must be a Leg, Legg or Egg company in electronics that could be bought also, so the holding could be Arm and a Legg.....
Apple
Not to save on license fees but to get access to more silicon tallent
Re: Just a thought
Apple were one of the founding shareholders in ARM.
Re: Just a thought
Apple was an early investor in ARM and has since invested even more heavily in it. But if it wanted to buy the company, its best chance was a couple of years ago. Nowadays it's difficult imagining how the purchase could get past the competition authorities and Qualcomm would probably get the the DoD to nix it anyway.
Everyone benefits from the current structure: ARM sells designs but not the chips themselves and it sells to everybody. There are competitors both of the fabless and fab support to keep it on its toes and the market keeps developing.
Greed
The ARM people are not stupid, they have priced the royalty rates where they are for a reason...
If they start cranking them up, a lot of customers would leave and move to other architectures - MIPS, RISC-V or POWER etc. Most embedded devices are not tied to any particular architecture, Linux runs on everything and the firmware is generally rebuilt for each new device anyway so their customers are generally not locked in.
Re: Greed
Beancounters
Same old story. Beancounters only see short term gains and a maximised "bottom line". Long term investment and future sales are for others. Except that they will move in and stuff those others too, given a chance.
Re: Meh
They already sold the crown jewels to China.
ARM will be dead in 20 years and a new China based company will be selling chips that look a bit like ARM but are totally not at all related to ARM, so don't have to pay licenses.
One Word.
Huawei.
They have the money, the need and would right royally f**k over the USA.
Re: One Word.
The USA would not be too troubled to migrate to RISC V.
Re: One Word.
if Huawei bought ARM there would be no new iphones, no new anything from Qualcom etc etc.
ARM designed cores are in most things electronic, especially portables, especially good performance low power.
Huawei bnuying ARM would be a big problem.
The US will buy it..
Just to use it against Huawei. Huaever, I hope the Chinese buy it though, would be so funny. They could use some of the US debt they own to fund it.
Only one possible buyer............
The Chinese government will buy it
Taking the company over would be both a military and business strategic advance for the Chinese. We have to hope our government recognise this and prevent any overseas purchase. The company should be nationalised NOW before any more secrets are lost
Re: Only one possible buyer............
"before any more secrets are lost".
I wonder what kind of secrets you are talking about, ARM is open enough for several companies to build the actual silicon.
ARM is a rich ecosystem
There is no way other "RISC" architectures could replace the ARM ecosystem.
Moving to another architecture would take decades!
Get real!
Well that's ARM screwed then
Its future is almost certainly this: a) vulture capitalist buying it up, b) fattening it up (charging customers more and cutting back R&D), and c) selling it onto the next "investor". Once you're on that roundabout you can't get off.
With RISC-V being more viable by the minute, one cannot help but think that ARMs business model is under threat. When selling phones as cheaply as possible cutting out every last license possible feels advantageous
While it was sad that ARM was sold a few years ago to Softbank, I don't think that the UK government buying it back if it is up for sale is actually of much use for national security grounds. ARM don't make any of the chips they design, and even if it were fully UK owned and ran that wouldn't stop the Chinese, US or anyone else producing ARM SOC if they had paid for a license.
It does appear that Softbank are not great at doing due diligence before investing, as they don't seem to understand how ARM operates and look at the fsck up that was WeWork.
$775.5bn is a hell of a return - I think you mean million