The Japanese telecom and Internet company SoftBank is gaining control of technology used to run most of the world’s mobile devices and has the financial wherewithal to compete more aggressively with Intel.
SoftBank is spending $32 billion to buy ARM Holdings, which licenses the chips used in not just smartphones but also an increasing number of Internet-connected domestic appliances and now even supercomputers. Its chips are best known for their energy efficiency, which is why they’ve proven so popular—extending battery life in smartphones and cutting power bills for larger devices. Among the companies that license ARM’s designs are Apple, Qualcomm, and Nvidia.
Intel should be especially worried by the purchase. The once-dominant chipmaker missed the boat on chips for mobile devices, allowing ARM to dominate the sector. The takeover by Softbank could give ARM far more resources to invest in products that further erode Intel’s market share. Chief among those could be Internet of Things hardware, which its chips are well-suited to.
SoftBank, which owns a controlling stake in Sprint in the U.S., among many other international properties, promises to maintain ARM’s brand-agnostic approach, in which it licenses technology to multiple partners. That will be worth watching. Given ARM’s dominant market position, even subtle changes to the ways in which it provides rights to processor designs could have a profound impact upon the smartphone and tablet industry.
(Read more: Bloomberg, “Moore’s Law Is Becoming Irrelevant,” “Why Intel’s Job Cuts May Be Just the Beginning,” “Supercomputer Powered by Mobile Chips Suggests New Threat to Intel,” “Intel Outside as Other Companies Prosper from AI Chips”)