Arm Ltd. Halts Spinoff of Two Internet of Things Businesses to SoftBank

Arm will keep the businesses distinct from its core chip-design business. SoftBank CEO Masayoshi Son speaks in Aug. 2018.

Photo: Rodrigo Reyes Marin/AFLO/Zuma Press

Mobile phone chip designer Arm Ltd. has called off a planned spinoff of two businesses to parent company SoftBank Group Corp. 9984 2.44% as the Japanese investment firm evaluates options for the semiconductor company it bought four years ago for $32 billion.

Arm is based in the U.K. and designs circuitry that powers the majority of the world’s smartphones. A month ago, the company said it planned to transfer two Internet of Things businesses to SoftBank.

On Monday, a company spokesman said that Arm, after further investigating its options, decided to keep the businesses under its umbrella. But the company will keep them distinct from Arm’s core chip-design business, with separate operations and accounting, the spokesman said, without elaborating.

Arm determined that the businesses could realize the same benefits of a spinoff to SoftBank by keeping the operations in-house, the spokesman said.

He declined to say if or how the move related to the potential sale or public offering of Arm, which Japan-based SoftBank has been considering. Keeping the assets under Arm’s corporate structure could make the company more valuable—and perhaps more attractive to potential buyers.

Under pressure for change from activist investor Elliott Management Corp., SoftBank in recent months promised some $42.5 billion in asset disposals, almost all of which it has completed or agreed to. It has a broad portfolio of holdings that include a large stake in China’s e-commerce giant Alibaba Group Holding Ltd. and the Arm investment.

Arm designs but doesn’t manufacture microprocessors for customers that include Apple Inc. and Samsung Electronic s Co. that go into smartphones and other devices. It licenses the blueprints to chip makers such as Qualcomm Inc.

Apple is moving its Mac computers from Intel Corp. chips to internally developed ones based on Arm designs, the Cupertino, Calif.-based company said in June.

When SoftBank bought Arm, it was partly a bet on a future where almost every device, such as cars and household appliances, would be connected to the internet. But the company has struggled to find a foothold in the market for software that drives the Internet of Things.

The businesses that Arm had looked to spin off include a unit called Treasure Data, which offers tools for customers to harvest and analyze data from Internet of Things devices, and a second called IoT Platform that focuses on managing devices and securely connecting them to networks.

The move, Arm said at the time, would allow the company to focus on its core semiconductor design business, although it would still collaborate with the spun-off entities.

The transfer had been expected to be complete by the end of September.

Arm is a major designer of chips that go into Internet of Things devices. Those activities aren’t affected by its moves around Treasure Data and IoT Platform.

Under pressure for change from activist investor Elliott Management Corp., SoftBank, in recent months has sold or agreed to sell almost all of the $42.5 billion in asset disposals it promised. It has a broad portfolio of holdings that include a large stake in China’s e-commerce giant Alibaba Group Holding Ltd. and the Arm investment.

Write to Asa Fitch at [email protected] and Phred Dvorak at [email protected]

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