Why would Apple buy ARM?
1 min read
The Silly Season normally opens for business around the end of July and lasts until early September. It's the time when newspapers fill their pages with stories that wouldn't make it to the page at any other time of the year. But the rumour that Apple is about to buy ARM, according to the London Evening Standard, suggests the season has opened early this year.
Strangely enough, all stories currently circulating on the web mention a purchase price of $8billion. That either means someone at ARM (or Apple) has spilled the beans on a huge deal or, slightly more likely, everyone is basing their comment on one original story.
Why would Apple buy ARM? On first sight, it might make sense. ARM chips feature in a number of Apple products, so having the source technology in house could work. ARM chips are also featured in most of the world's mobile phones, so that could be an interesting lever to pull.
Why would ARM sell to Apple? Simply because its investors would see a profit, not for any technological benefit.
Will it happen? Highly unlikely. ARM technology is made available to companies via well written, long term licenses. Even if Apple were to buy, those licenses would have to be honoured, so Apple wouldn't get any benefit. And Apple already has in house capability in the form of PA Semi, which designed the chip at the heart of the iPad.
Is ARM a takeover target? It's not the first time that ARM has been mentioned as a potential takeover target. Despite its technology being in chips everywhere, ARM is only a $500million company, which is peanuts on a global semiconductor company scale; Intel's sales last year were about $35bn.
As such, ARM is an 'in betweener'. It's big enough to be a global brand, but not big enough to be a 'player'. Companies in this category tend to be acquired because their investors become unhappy with their earnings, cash in their holdings and try elsewhere.
What could ARM do? It's a fabless company which licenses its technology, so it certainly would not want to acquire manufacturing companies. Its expertise is in processor related design, so it could try its hand at a pc oriented processor. But it would still need companies to license the result and the pc landscape is scattered with the bleached bones of others who tried and failed.
Who might buy ARM? The $64,000 question. But not Apple.
