ARM Holdings, which Japanese internet giant SoftBank, has agreed to buy for £24.3bn (€29bn), is the world’s biggest designer of these semiconductors.
Founded in 1990 in Cambridge, and today employing about 4,000 people, the company focuses on small, low-power devices, while industry leader Intel leads in desktop and laptop personal computers.
The market moved in ARM’s favour as mobile phones began to proliferate.
Now its designs are in more than 95% of the world’s smartphones — including every iPhone and Samsung Galaxy product — accounting for an estimated total of 45% of ARM’s sales.
Televisions, medical equipment, cars, and internet-connected home appliances also use its designs.
The ubiquity of ARM’s chips, and its related patent portfolio, led SoftBank to offer such a large sum for the company. However, unlike Intel, ARM does not actually manufacture semiconductors.
Instead, it licences its designs to companies such as Samsung, which own the fabrication plants required to manufacture the parts.
The business strategy is immensely lucrative, freeing the company of the costly job of building such plants. In 2015, the company earned £339.7m, on sales of £968.3m.
Designing chips is time-intensive, technically challenging work. ARM has excelled as a designer-for-hire, creating systems for other companies to plug into their devices.
Even so, it is being challenged because of plateauing demand for smartphones, impacting ARM customers such as Apple.
Selling to SoftBank may give the company a longer runway to build products for emerging technologies, including future automobiles.
Softbank chairman Masayoshi Son sees ARM’s future in being inside the legion of products that are becoming internet-connected, from street lamps to air conditioners, washing machines to drones — so-called “internet of things” devices.