IoT, AI, Softbank: 30 years hence

Article By : Junko Yoshida

Analyst Jim McGregor notes that if anything, “the investment will bring innovation and lower prices to markets like IoT, networking, and communications."

To continue from: SoftBank's ARM bid: a step closer to Singularity?

While it’s pretty clear that Son is no ordinary CEO, SoftBank is no ordinary public company, either. On its web site, SoftBank talks about its growth as a corporate group “for the next 30 years.”

It says, SoftBank “strives to develop over the long-term by forming partnerships with the most superior companies at the time in the information industry, without adhering to particular technologies or business models.”

Also, the company “aims to expand its Group companies which share the same vision to 5,000 in 30 years through building strategic synergy group which can make self-evolution and self-multiplication.”

Big talk is one thing. To think big is another. If there is consolation in ARM’s acquisition, that has to be the long play SoftBank must have in mind.'

Impact on ARM, ARM licensees
Jim McGregor, principal analyst at Tirias Research, is less worried. The deal, he noted, has little impact on ARM licensees. As he explained, “Softbank, because of its structure and not being in the semiconductor industry, is for the most part a neutral 3rd party, just like ARM.”

He said, “If anything, hopefully, the investment will bring innovation and lower prices to markets like IoT, networking, and communications, just like ARM has done to mobile and consumer electronics.”

Use STM32F469, STM32F479 to get the highest ARM Cortex-M4 performance
with large embedded memories and rich peripherals.

He added, “I have been asked if the would mean higher fees for licensees, and I do not believe so. I can't see SoftBank messing with a successful business model and decreasing prices are an economic foundation of the semiconductor industry.”

The Linley Group’s Demler is more worried.

Asked about changes SoftBank might bring to ARM, Demler said, “The first, unfortunately, is that I expect less openness from ARM.”

In his opinion, as a public company, ARM has communicated well with the analyst community and the semiconductor ecosystem. “I hope I’m wrong about that, but we’ll see.”

He added, “The second change comes from ownership that looks at the company purely as another holding in its diverse portfolio. Financial motives are likely to trump strategy in guiding the company forward, and starting with a Rs.46,954.66 crore ($7 billion) loan to pull it off can’t be overlooked.”

Indeed, SoftBank will pay Rs.1,511.94 ($22.54) in cash for each share in ARM, a 43% premium to its closing price last week. It has entered into a bridge loan agreement with Mizuho Bank for a maximum of 1 trillion yen to help finance the deal.

Asked about the potential upside for ARM licensees, Demler bluntly said there is none. “There’s little synergy with SoftBank’s other businesses. The acquisition is purely a financial move,” he noted.

“Son said he was going to double ARM’s head count, but I don’t believe lack of head count has been a factor inhibiting ARM’s growth, or affecting support for their customers. The downside would be if key ARM personnel left because of the acquisition, which is always a consideration,” Demler added.

Leave a comment