SoftBank Considering Possible Sale of Arm Holdings as Apple Gears Up for Arm-Based Macs

[deconstruct60]

ARM is now Japanese owned, but what will happen to Apple if it is sold to an Chinese entity?

That likely would be blocked by the USA Fed Trade Commission on a National Security basis.
It wouldn't be "an" ("a") Chinese entity. It would be 'the' Chinese government behind it in the background. So, no sale.

one of the principal places ARM is developed is in Austin, TX USA. The US Govt can't designate the buyer completely but there are certain subset of buyers that are on the 'no fly' list.

 

[M3gatron]

Well, they could buy it and not renew any licenses - goodbye android.

Or Google buys it(as Alphabet has more cash reserves than Apple anyway) and doesn't renew the agreement with Apple. How about that?

 

[Abazigal]

Or Google buys it(as Alphabet has more cash reserves than Apple anyway) and doesn't renew the agreement with Apple. How about that?

Except Google won’t. Paying so much for an asset they themselves have no use for is cutting off the nose to spite the face.

 

[M3gatron]

Except Google won’t. Paying so much for an asset they themselves have no use for is cutting off the nose to spite the face.

Well Apple would have even less use for ARM Holdings than Google and if it's about throwing money around Google's parent company has more to throw anyway.

 

[bluecoast]

I can imagine Apple buying a controlling share. They are hedging a lot on their own CPU's and may want full control over the future of ARM.

This. No doubt selling to Apple even a controlling share will be at least double in value as to what SoftBank paid for all of ARM 4 years ago. SoftBank must know that Apple will bid to the very top to ensure that it controls the ARM architecture as it’s so crucial to their future.

Then as others have said, if Apple makes a condition of the sale providing licences to anyone who wants them, they can side-step any antitrust concerns.

Presumably they’ll bring all of ARMs IP and HQ to the USA as well. Everyone wins. Except for Huawei.

 

[JulianL]

Interestingly ARM was originally a joint venture between Acorn computer ( good old BBC Model B! ) and Apple! That I never knew.

From wiki
"... Apple was developing an entirely new computing platform for its Newton. Various requirements had been set for the processor in terms of power consumption, cost and performance, and there was also a need for fully static operation in which the clock could be stopped at any time. Only the Acorn RISC Machine came close to meeting all these demands, but there were still deficiencies. The ARM did not, for example, have an integral memory management unit, as this function was being provided by the MEMC support chip and Acorn did not have the resources to develop one.[55]

Apple and Acorn began to collaborate on developing the ARM, and it was decided that this would be best achieved by a separate company.[55] The bulk of the Advanced Research and Development section of Acorn that had developed the ARM CPU formed the basis of ARM Ltd. when that company was spun off in November 1990. Acorn Group and Apple Computer Inc each had a 43% shareholding in ARM (in 1996),[56] while VLSI was an investor and first ARM licensee.[57]

True but to be clear that doesn't mean that Apple was involved in any way in the original ARM design. In fact, one could even make a case that the ARM architecture was originally developed in part as a weapon to use against Apple.

The initial ARM development was 100% Acorn Computers, the Apple joint venture to progress ARM development further under a separate company didn't come until later. In fact the first company to collaborate with Acorn in the early development of the ARM architecture was Olivetti. The early days history is as follows (spoiler, Apple does play an early role but it is as an adversary not as a collaborator) ...

1 - Acorn Computers. The initial ARM chip, actually 4 chips: the CPU itself + VIDC (video controller) + MEMC (memory controller) + IOC (I/O controller), were all 100% developed by Acorn during the time it was independent. The project was strictly on a need to know basis within Acorn even after first silicon came back. Acorn grew from about 250 up to something like 450 employees during the early ARM years and only about 20 or 30 employees within the company had any knowledge of the ARM project's existence (I was one of those employees - a fact and a time of my life that I will treasure for ever).

2 - In 1985 Acorn hit big problems. The common narrative is that issues with a new cut-down version of the BBC Micro (The Electron) resulted in massive unsold stock ultimately resulting in Acorn's 1985 financial crisis but I would add the fact that Acorn also very aggressively invested in trying to crack the US market, in particular the education market, and came up against .... Apple! I would cite this as Apple's first appearance in the story of ARM, Acorn threw a lot of investment into its attempt to crack the US market and failure to get any return on that investment, coupled with the massive unsold Electron stock, was a contributing factor to Acorn ceasing to be an independent company and needing to find a cash injection. (There was also massive unsold BBC Micro stock over in the USA that was sold in its entirety to a small import/export company in San Antonio Texas when Acorn pulled out of the USA.)

3 - The first company to partner with Acorn was (unbeknown to the company itself at the time!) Olivetti which at that time was a major European computer manufacturer (alongside the likes of ICL, Siemens, Bull, & Nixdorf). Acorn, staring bankruptcy in the face, went out looking for external investors and the result was Olivetti taking a minority stake in Acorn. At that time the ARM project was still so strictly need-to-know within Acorn that its existence wasn't even disclosed to Olivetti but once Olivetti had bought its equity stake it was then technically the first other company apart from Acorn to have some stake in ARM development.

4 - Acorn's financial woes continued and Olivetti made a second equity investment taking a controlling stake. Around about that time Acorn split into two divisions, the product group that was responsible for exploiting ARM in Acorn's own products (ultimately leading to the Archimedes) and the OEM group which was the start of Acorn thinking about licensing its technology to others. At the start it was physical ARM chips that were being marketed not design files or rights to implement the architecture and not surprisingly Olivetti was a big focus of those initial OEM activities where Olivetti was looking to use ARM in a range of scientific computers it wanted to bring to market. I dodged a lot of oranges during that time (if anyone gets that reference I'll be impressed!).

As mentioned in the Wikipedia excerpt Acorn did indeed go on to spin off ARM into a separate company at which point Apple came in as a partner rather than a competitor but I had left the Acorn by that time so have no real inside knowledge of that part of the story.

 

[DNichter]

A lot of money, depends on the details. It seems they can continue their licensing agreement, but maybe it makes sense to close off access to others. Fully vertical integration closed off to other PC makers would be ideal for Apple.

 

[mabhatter]

So now that Apple extends its ARM product line (=more income after licenses to SoftBank), they wanna sell ARM? That does not compute to me.

I feel like it’s “cash out to patent trolls”. Sell the assets in some manner that will lead to quick bankruptcy. Then the new owner can “renegotiate” the Apple contractors which were probably for low fees and long terms.

we saw the same thing with JPEG and MP3 back in the day.

best case is that they’re not getting the money they want and floating it publicly to run up the stock price of Apple wants a bigger bite. Apple’s worth a trillion dollars.. everyone wants a bigger bite of it.

 

[MacBH928]

This does not computer, why sell the company when its value is about to rise as Apple adopts it for computers which might make other companies switch over their devices...

That being said, all those using ARM architecture aren't they worried that ARM might hike prices on them or just say we no longer want to sell you a license?

Imagine if Apple bought Arm and then just said to rest of world "yeah, no more arm CPUs for anyone." lol

I heard there is an open source CPU called RISC-V, I am not sure if its better or worse than ARM.

Antitrust regulators wouldn’t allow any such deal to go through unless the buyer agreed to make licenses available.

What law forces me to keep the technology I own for myself? They can build their own chips or use Intel or any other thing.

 

[longofest]

There is no way regulators let Apple buy ARM unless there is an ironclad provision that it becomes a wholly operated subsidiary or something like that, such that its arrangements with other manufacturers are completely free from Apple's interference.

 

[mazz0]

Presumably they’ll bring all of ARMs IP and HQ to the USA as well. Everyone wins. Except for Huawei.

And ARM's British employees?

 

[dukeblue219]

Apple doesn't really need to buy ARM. I don't see what the value would be any more than Apple buying TSMC or a DRAM manufacturer or something. They stick to what they do best, and let ARM do the same. It would be stuck in regulatory approval (for good reason!) for years anyway.

 

[bluecoast]

And ARM's British employees?

I mean having its legal HQ and intellectual property all based in the USA.

I’m British - I’m happy if ARM fully stays in the uk. I just doubt that it will.

 

[Brien]

I totally expect Apple to buy ARM.

 

[justperry]

Some people don't seem to realise how many devices have arm in them.
Just a few

Phones/Tablets
Switches/Modems/Routers
Nas
Servers
iOT
Settopboxes
Tv's
etc.

 

[mazz0]

I mean having its legal HQ and intellectual property all based in the USA.

I’m British - I’m happy if ARM fully stays in the uk. I just doubt that it will.

I don’t get how that would be everyone winning though? Seems the UK employees possibly, taxpayers certainly, would be worse off?

 

[mannyvel]

Broadcom or Qualcomm? Both would be terrible, but Qualcomm is marginally worse.

Maybe AMD would buy it to diversify. Freescale?

 

[bluecoast]

I don’t get how that would be everyone winning though? Seems the UK employees possibly, taxpayers certainly, would be worse off?

I’m just speculating that Apple is probably going to happier if they can move ARM to be registered as having its HQ in California.

I.e. so all of its assets etc come under California state and US federal law etc.

Simply because Apple is based in California too, of course.

I’m not a corporate lawyer but I would guess it would mean that it could still have its R&D teams in Texas and the UK etc.

 

[paulsydaus]

that would likely be illegal as such a merger would likely draw interest from regulators who would perceive that to be anti-competitive.

Imagine if Apple bought Arm and then just said to rest of world "yeah, no more arm CPUs for anyone." lol

 

[H2SO4]

If Apple was to own ARM then it would make for a more balanced relationship with Qualcomm.

You could substitute the name of any company in place of Apple and achieve the same, no?

 

[pankajdoharey]

OK a lot of you dont realise that Apple has a perpetual ISA License, so they dont give two hoots about the cortex design that ARM Produces every yr, Every other ARM Vendor in Silicon Valley needs that Cortex core design and they build other peripherals around it like modems , controllers etc ... Apple Builts the cores from scratch and does not depend on the ARM Cortex design . SO who ever buy it, it surely won't be apple. Because they dont need it, the only reason they can buy it is to spite Android and the rest of the industry by simply having a controlling stake and use the ARM talent to design new version of AX Series instead of designing the Cortex, Effectively killing the CPU for the rest of the industry or even worse not killing it but always delaying the new CPU Releases effectively keeping Android Market always behind the AX Series chips.. But Apple isn't that stupid to kill a CPU Standard just to spite android. So I really doubt who will buy ARM? It could be Intel. They need it the most to survive.

 

[Philip_S]

As someone who does a lot of investing it's been remarkable watching how badly Softbank have wasted their money.

ARM wasn't necessarily a bad purchase but it was a bit odd. Christ if I had invested my money like Softbank has I would be bankrupt.

Softbank's investing "strategy" has always been a mystery to me. Lengthy investment in perpetual money-loser Sprint, massive spending on the WeWork pyramid scheme, basically everything they do looks like either a sucker chasing an obviously bad bet or throwing good money after bad on a failing bet.

As for why now, that's easier--they just lost an absolutely ungodly amount of money on Sprint, WeWork, and various other catastrophically bad investments and are desperate for cash, so they're selling off things that are actually still worth something.

Several of SoftBank's less successful investments have made very heavy use of Greensill supply chain financing, which effectively allows them to run up enormous debts which don't technically count as loans, and SoftBank has a large stake in Greensill. In other words, it looks remarkably like they've been doing the old vulture capital trick of running a company into the ground then letting it go bust after you've stripped it bare and run up enormous debts.

 

[cgsnipinva]

Well, they could buy it and not renew any licenses - goodbye android.

That wouldn't be a smart move - it would raise too much scrutiny from regulators.

A smarter move would be a consortium that buys the Arm to support its development and obtain wider industry adoption which would benefit Apple since they are in the front of this movement.

Apple could enlist industry partners with which it has good relationships - like Microsoft and IBM. That would give it regulatory cover and help adoption in desktops and the enterprise.

Microsoft wants in on this as they want to get their platforms in the ARM space and wants to standardize across mobile and workstation environments.

 

[Nicky G]

Why not? Apple seems to have made "somewhat effective" use of ARM without it. 😉

It's true, and they made decent money off of it when they really needed it. There's a decent chance there wouldn't be an Apple today had they not done very well in that transaction. But... in an alternate universe where Apple had perhaps unique access to ARM? As an old-school Apple fanboy, part of me is tickled by that hypothetical scenario.