5 Things About ARM, SoftBank's Takeover Target

Japan’s SoftBank Group Corp. has reached an agreement to buy U.K.-based chip-designer ARM Holdings PLC in an all-cash deal valued at more than $32 billion. The company is little known to general consumers, but ARM’s technology helps run most of the world’s smartphones and a growing number of “Internet of Things” devices.

#1: A Key Tech Company Many Don’t Know About

ARM designs the microprocessors found inside more than 95% of the world’s smartphones, including those made by Apple Inc. and Samsung Electronics Co. The Cambridge, England-based company’s chip technology has become the industry standard because of its low power consumption and cost. As a B2B company, ARM isn’t widely known by general consumers, but it is one of the U.K.’s top tech firms.

#2: Born from Apple’s Failed iPhone Precursor

ARM was founded in 1990 as a joint-venture between Apple Inc., Britain’s Acorn Computers Ltd. and U.S. chip maker VLSI Technology Inc. to develop a chip for the Apple Newton, a personal digital assistant that Apple was developing. The Newton was a flop after its launch in 1993.

#3: No Factories

Because of the enormous capital investment required to build chip factories, many of the world’s most advanced chipmakers are “fabless,” meaning they don’t run any factories. ARM is such a company. Its roughly 4,000 employees focus on designing the blueprints of chips that are manufactured for its clients by a “foundry,” or chip-contract manufacturer.

#4: Slowing Smartphone Market

ARM’s investors have been watching the slowdown of the global smartphone market. ARM’s shares plunged in February after its most recent quarterly earnings report, when the company said its revenue for this year would be in line with “current” market expectations. Industry watchers at that time had grown less bullish about this year’s market than a few months before, as leading smartphone makers such as Apple saw sales growth lose steam amid market saturation.

#5: Looking Beyond Smartphones

ARM has been investing in the “Internet of Things,” which involves connecting everyday items such as cars and light bulbs to the internet. In May, ARM acquired Apical Ltd., a U.K.-based smart-camera company for $350 million. Apical’s technology lets electronic devices learn from their environments, for instance, helping a security camera tell a human from a cat.