Britain’s largest technology firm ARM is being bought by SoftBank as the Japanese multi-national attempts to capitalise on growing demand for internet-connected sensors and appliances.

The £24.3bn deal will see SoftBank double the number of UK-based staff at chip designer ARM, whose processor designs are used in 95 percent of smartphones, including the iPhone and Samsung Android handsets.

However, it is ARM’s Internet of Things (IoT) expertise that SoftBank singled out as motivating the acquisition.

“ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the “Internet of Things”,” said Masayoshi Son, chairman and CEO of SoftBank.

In contrast to slowing sales of smartphones in a saturated market, demand for IoT devices is expected to grow sharply in the coming years. Analyst house Gartner predicts there will be 6.4 billion internet-connected sensors and appliances by the end of this year, up 30 percent from 2015.

ARM technology already underpins far more than smartphones, with 55 percent of ARM-based processors shipped in the final quarter of last year being for non-mobile uses. Of the 51 new licences for ARM processors signed during the quarter, nine were for the car industry and 25 were for use in other connected devices, such as smart sensors and medical equipment.

For years ARM has licensed designs for its Cortex-M range of processors, tiny and power efficient chips suited for use in internet-connected devices that collect data and swap it with other online appliances and cloud services. The firm also offers a range of other hardware designs and software aimed at the IoT market, such as its Cordio low-power radio and its mBed Device Server software for securely managing IoT networks.

Speaking earlier this year, ARM CEO Simon Segars said the company was stepping up its R&D spend to “create new products that will take advantage of opportunities in the Internet of Things”.

Following today’s announcement of the acquisition, Segars said that Softbank’s investment would help ARM realise its goal of broadening its focus to these new markets.

“When I think about the investment and the commitment that’s going to be required to develop the future technologies — like the Internet of Things, like fully autonomous cars — these are technologies that will require long-term investment, they are not iterative on what we have today,” he said.

“They’re going to require invention, development, the bringing together of different partners in a very diverse ecosystem.

“That is a non-trivial exercise, it is one that will take time and one that will take investment. SoftBank share our view on where this technology can go and on how long it will take and the level of investment that will be required.”

However, at least in the near future, ARM’s breadwinner will continue to be its smartphones-focused chips, with ARM projecting healthy returns in the coming year from its smartphone and server-oriented ARMv8 Cortex-A range. According to ARM, that revenue growth will be secured by the higher royalty rate it earns from these processors. ARM’s annual pre-tax profits rose 31 per cent last year, increasing to £414.8m.

Across the broad range of technology powered by ARM-based processors, such as smartphones and, more recently, servers produced by the likes of Qualcomm and AMD, Son says SoftBank is committed to pursuing ARM’s existing business plans.

“SoftBank intends to invest in ARM, support its management team, accelerate its strategy and allow it to fully realise its potential beyond what is possible as a publicly listed company,” he said.

“As an integral part of the transaction, we intend to at least double the number of employees employed by ARM in the UK over the next five years.”

SoftBank plans to retain ARM’s management team and will keep the company’s headquarters based in Cambridge in the UK, he said.

The UK’s chancellor Philip Hammond expressed his belief that the acquisition demonstrates that British businsesses can still attract foreign investment, following last month’s public vote that the UK should leave the EU.

“This would be largest ever Asian investment into the UK & would double size of ARM’s UK workforce.Big vote of confidence in British business,” Hammond tweeted.

Following the Brexit vote, ARM expressed concern over the implications for the 200 non-UK EU citizens it employs at the firm’s Cambridge HQ.

More than 60 billion ARM-based chips have been shipped by over 300 companies since ARM was founded in 1990.

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