By Don Clark
July 18, 2016
Competing with ARM Holdings PLC has always posed special problems for Intel Corp. , which has repeatedly tried and failed to crack the British company’s lock on smartphone chip technology. That task could soon get even tougher.
Japan’s SoftBank Group Corp. , which on Monday announced plans to buy ARM for $32 billion, pledged to invest more in the company and help it double its workforce over five years. The extra money for ARM could also be used for acquisitions and internal technology development to bolster the chip designer’s sway in new markets—such as the data center equipment that is Intel’s stronghold.
“If you are Intel, that potentially makes ARM even more potent as a competitor,” said Linley Gwennap, an analyst at the Linley Group.
Indeed, ARM became a big enough threat over the past decade that rumors have frequently surfaced that Intel might try to buy it. But peculiarities that make ARM’s business model so troublesome for Intel also make it unlikely the Silicon Valley giant would consider topping SoftBank’s bid, analysts say.
Intel, eager to reduce its dependence on the slowing computer market, over the years closed the power consumption gap but still largely failed to gain a major foothold in smartphones. One reason is that ARM licensees like Qualcomm Inc. had a lead in wireless communications that Intel has struggled to match. But the bigger reason, Mr. Gwennap and others say, is the sheer number of ARM licensees that compete to keep prices down and add new features quickly.
SoftBank Chief Executive Masayoshi Son on Monday said Intel’s strategy has merits and strengths. “But ARM has a totally different business model and different kind of strength,” he said during a news conference in London.
http://www.wsj.com/articles/intels-battle-with-arm-looking-even-tougher-now-1468873935
