ARM Holdings, the UK’s leading technology company and the star of the so-called Silicon Fen area around Cambridge University, has received an acquisition offer from Japanese telecommunications conglomerate SoftBank for $32 billion, some 21 times the revenue of the company last year, $1.5 billion. The offer is equivalent to £17 per share, 43% up on its price last week.
The microprocessors and GPUs ARM designs are found in a wide range of electronic devices, from PCs, laptops, and Android smartphones and tablets, as well as smartwatches. It is the third-most popular smartphone maker, and the first to see the opportunity to capitalize on a design focused on efficiency and low consumption, and one of the key companies in the development of the internet of things (IoT). Clearly, ARM’s market value didn’t reflect its presence in technology today.
The company’s business model consists of licensing its designs and technology to device makers, who pay a small amount for each unit they sell, which explains how the company turned over $1.5 billion last year. ARM doesn’t make chips or even design the chips on the market.
Instead, ARM designs the core that ends up being installed in the chips of other companies such as Qualcomm, Nvidia, Apple or Samsung. ARM licenses their design to manufacturers that wan to use its cores in their chips and finally in their devices or…
