ARM Holdings purchased for $31.4 Billion by SoftBank

ARM Holdings, a Cambridge-based internet technology company that designs chips and holds the title as the UK’s only global-scale tech company and is also listed in the FTSE 100 has accepted a takeover offer by the Japanese tech conglomerate SoftBank for $31.4 billion.

ARM’s technology is present in virtually every mobile device, tablet and smartphone. The phone designs chips, but does not manufacture them or sell them, which literally means every major communication manufacturer will have to license ARM’s designs and pay royalties for every single chip sold. ARM currently possesses more than 4,500 granted or pending patents, a feat that crowns the firm as an intellectual property powerhouse. Their key asset is information and know-how. They do not produce any products, rather, they design the core engines that get manufactured into other companies’ chips, such as Nvidia, Qualcomm, Apple’s A9 and Samsung’s Exynos.

SoftBank is a Japanese technology conglomerate that possesses an extensive range of tech holdings, which include investments in Alibaba, Snapdeal, OldCabs, a controlling interest in US mobile carrier ‘Sprint’, and its own mobile carrier service in Japan. Given the nature of both companies, market insiders speculate that the synergy that fuels the deal has to do with SoftBanks long bet on the future and expansion of artificial intelligence (AI) and the Internet of Things (IoT), ARM’s micro-processing expertise might soon find itself in new applications such as connected appliances and intelligent robots.

ARM presents itself as the perfect poster-boy on the importance of intellectual property rights. It is a company that has greatly prospered without any tangible or physical assets. It owes its success to its prowess in the industry and to intellectual property rights which provide the structure and security to sell, license and protect its inventions and know-how, which represent the largest sum of their assets. In a way you can think of ARM has a good patent troll that invests heavily on R&D and innovation to further protect its market position.