Name: SoftBank's ARM Acquisition Is a No-Brainer
Uploaded: 2019-12-17
Duration: 2 min 38 s
Description: The deal is worth $32 billion.

[MUSIC PLAYING] ANDREW NUSCA: SoftBank will acquire the British chip design company arm for $32 billion dollars. Robert, is it a good deal? ROBERT HACKETT: This is a fabulous deal for SoftBank. This is a Japanese media conglomerate. It's got investments and holdings in companies ranging from Alibaba on the internet to Sprint for the telecom [INAUDIBLE].. ANDREW NUSCA: All sorts of stuff. ROBERT HACKETT: Oh, yeah. And right now what this shows is it shows that SoftBank is moving forward in the internet of things, which is poised to be the next great big shift that hits the tech universe. You know Arm is the one who designs the chips that go into all of these internet-connected devices. And soon, the number of internet-connected devices is going to outpace the number of humans on the planet Earth. So good on you, Masayoshi Son. ANDREW NUSCA: [LAUGHS] Look, as much as it pains me to say this, and on a show like Tech Debate, I actually agree with you. This is a pretty good deal. ROBERT HACKETT: Oh, yeah. ANDREW NUSCA: If I was SoftBank, I would do this too. Arm is pretty plum. But at the same time, there are a lot of risks with this deal. So let's take your premise. Let's talk about the internet things. There was a company that missed out on a big technological revolution called Intel. Right? Arm came into being, grew into popularity on the back of the smartphone and other mobile device as well. Do you really think that Intel and all of its largesse is going to just cede the internet of things to Arm? I don't think so. ROBERT HACKETT: Well look, like you already said, Intel missed the boat on smartphones. And Arm totally ate Intel's lunch. Now that means that Arm has the first mover advantage moving into the internet of things. And plus, they work with all of these partners. They don't actually manufacture the chips themselves. They just partner with others. They make the design. So they don't have that to worry about. ANDREW NUSCA: Let's talk about the money, for example. So let's take this idea, ITO, it's going to grow. Lots of devices, millions of devices, and I think we can both agree that that's probably going to happen. What's kind of curious is how much money could Arm possibly make on these devices? How much can you make on a tiny, tiny little semiconductor that there are millions of them all over the world? I don't know. It doesn't seem to be too promising, especially when you're not making them. So if you're Intel, you want to lean on something that makes you more money and that would be the data center on which the entire internet of things rests. I don't think Arm is really a serious competitor there, and that's got to give you pause. ROBERT HACKETT: Hey, look. That's exactly where Arm wants to grow. And also, as I mentioned about all of the partners that Arm has lined up with, Intel, sure, it's got a bigger valuation than Arm does. But if you look at all of the other partners that Arm has, it's got Qualcomm, Samsung, Apple. It's just a whole host of opposition. So good luck, Intel. ANDREW NUSCA: [LAUGHS] That's a fair point. For one show that always wheeling and dealing, come to fortune.com for more Tech Debate. 

SoftBank's ARM Acquisition Is a No-Brainer

Finance

Softbank will acquire the British chip design company armed for $32 billion. Robert, is it a good deal? This is a fabulous deal for Softbank. I mean, this is the Japanese media conglomerate. It's got investments and holdings and companies ranging from, uh, you know, Ali Baba on the Internet Thio sprint for the telecom. Oh, yeah, I mean, and right now, what this shows is it shows that Softbank is moving forward in the Internet of things which is poised to be the next great big shift that hits the tech universe. You know, arm is the one who designed the chips that go into all these Internet connected devices. And soon the number of Internet connected devices going outpace the number of humans on the planet Earth. So good on you, Masayoshi Son. Look, as much as it pains me to say this, but on a show like tech debate, I actually agree with you. This is a pretty good Yale. If I was Softbank, I would do this to arm, you know, pretty plum. But at the same time, there are a lot of risks with this deal. All right, so let's take your premise Let's talk about the Internet things. Uh, you know, there was a company that missed out on a big technological revolution called intel. Right arm came into being grew into popularity on the back of the smartphone and other mobile devices. Well, do you really think that intel in all of its largesse is we're gonna just feed the Internet of things to arm? I don't think so. Well, looks like you already said, until missed the boat on smartphones and arm totally ate Intel's lunch. Now that means that arm has the first mover advantage moving into the Internet of things and plus, you know, they work with all these partners. They don't actually manufacture the chips themselves. They just partner with others. They make the design. So what they don't have that's worried. Let's talk about the money, for example. Okay, so let's take this idea. Okay? I o T is gonna grow lots of devices, millions of devices, and I think we can both agree that that's probably gonna happen. What kind of curious? How much money could I possibly make on these devices? How much can you make on a tiny, tiny little semiconductor that there millions of them all over the world. I don't know. It doesn't seem to be too promising, especially when you're not making them. So if your intel you want to lean on something, that makes you more money and that would be the data center on which the entire Internet of things rest? I don't think Arm is really a serious competitor there. And that gotta give you pause, you know? Hey, look, that's exactly where Arm wants to grow. And also, I mean, as I mentioned about all the partners that arm has lined up with, you know, Intel. Sure, it's got a bigger evaluation. That arm does. But if you look at all the other partners, that arm has its got Qualcomm, Samsung and Apple. I mean, it's just a whole host of opposition. So good luck until at the fair point for one show that's always wheeling and dealing. Come to fortune dot com for more tech debate