UK chip designer Arm, bought by SoftBank for a hefty $32 billion in 2016, has proposed a transfer of its two IoT Services Group (ISG) businesses – IoT Platform and Treasure Data – to "new entities" owned and operated by SoftBank.
Assuming board approval, the reorganization should be done and dusted by September.
A trimmed down operation will apparently enable Arm to "deepen its focus" on its main semiconductor business. It still expects to collaborate with the hived-off IoT outfits, however.
"SoftBank's experience in managing fast-growing, early-stage businesses would enable ISG to maximize its value in capturing the data opportunity," maintained Simon Segars, Arm's CEO. "Arm would be in a stronger position to innovate in our core IP roadmap and provide our partners with greater support to capture the expanding opportunities for compute solutions across a range of markets."
Richard Windsor at Radio Free Mobile believes a relisting of Arm is the likely endgame.
Relieved of its low-margin IoT business, Windsor proffered that Arm's cash-flow and profitability will rise and make an IPO viable. In turn, a listing should help SoftBank offset some of the huge (and embarrassing) investment losses incurred by the Vision Fund.
"There is the question of valuation, but with the market being completely devoid of any attachment to fundamentals – with the exception of the banking sector – the timing [for an IPO] looks sound," remarked Windsor. "In this environment, Arm might be able to relist at a valuation that will keep SoftBank, its shareholders and its partners in the Vision Fund quiet."
Arm restructuring seems another loss of face for Masayoshi Son, SoftBank's CEO and brains behind the now-beleaguered Vision Fund.
When Son bet heavily on Arm four years ago, the original plan was to ride an expected wave of IoT growth and then relist – at some unspecified time, but seemingly within around five years – at a valuation in excess of $50 billion.
— Ken Wieland, contributing editor, special to Light Reading