Arm float ‘more likely’ as it drops internet-of-things unit
ARM’S decision to spin off its “internet of things” (IoT) services division and focus on its core chip design business is a signal a float is “now more likely”, analysts have said.
The SoftBank-owned chip designer announced it would hive off its IoT business late on Tuesday.
The Cambridge firm, which was bought by SoftBank in 2016 for £24bn, said it would transfer two businesses to the Japanese conglomerate, which would oversee them directly.
Arm has built up the business under four years of ownership by SoftBank, which has the experience to make the most of the potential of the IoT sector, said Simon Segars, the Arm chief.
The move is subject to the approval of board members and is expected to be confirmed by the end of September.
It comes after Arm invested hundreds of millions of dollars in expanding its IoT wing, including buying Treasure Data, a US start-up, for $600m (£477m) two years ago.
SoftBank, led by chief executive Masayoshi Son, had seen the so-called internet of things as triggering a surge in connectivity with up to one trillion new devices. Mr Son believed this could create significant value for a silicon design company such as Arm.
The Japanese technology firm is thought to be considering relisting Arm on the Nasdaq in New York,
The Daily Telegraph reported earlier this week, in a blow to the UK technology industry.
It has discussed plans to take the chip firm public in 2023, but has not said where. Analysts said the move signalled that Arm was concentrating more on its core business of designing underlying technology for semiconductor chips, and its own profitability.
Richard Windsor, an independent analyst at Radio Free Mobile, said the move could signal a “rapid return to the stock market”, and SoftBank would need a valuation of $50bn or more to give investors a strong return.
Patrick Moorhead, an analyst at Moor Insights & Strategy, told SiliconAngle, the trade publication, that the move showed the “desire to show the right level of profitability” ahead of a possible float.