March 2, 2017 3:20 pm JST
Interview

SoftBank's ARM sees China overtaking US as its top market

The chip titan has huge hopes for connected devices

CHENG TING-FANG, Nikkei staff writer

ARM Holdings Vice President Ian Ferguson said China is a "massively important" market for his company. (Photo by Cheng Ting-Fang)

BARCELONA, Spain -- ARM Holdings, the U.K.-based chip designer owned by Japan's SoftBank Group, regards China as "massively" important to its growth and believes the country will become its biggest market in a few years, a senior executive said Wednesday. ARM's microprocessor architecture powers more than 95% of the world's smartphones.

The remarks by Ian Ferguson, vice president of corporate marketing and strategic alliances at ARM, come at a time when Beijing is rushing to develop a globally competitive semiconductor sector. The push is rapidly driving up ARM's business with such Chinese chip suppliers as Hisilicon Technologies -- Huawei Technology's chip arm -- state-backed Spreadtrum Communications and various smaller design houses.

"For the past five years, China is the market that shows the fastest growth ... and the pace of growth is likely to continue to keep up in the next five years," Ferguson told the Nikkei Asian Review on Wednesday at the Mobile World Congress in Barcelona. He adding that he thinks China will overtake the U.S. as ARM's No. 1 market in the foreseeable future.

About a decade ago, ARM had only 10 employees in China, but the figure has since swelled to 250, Ferguson said. The company's new office in Shanghai is twice as big as its previous quarters. In addition, ARM has opened "accelerators" for promoting the development of the internet of things in four Chinese locations: Beijing, Shanghai, Shenzhen and Chongqing.

Ferguson said building up business with Chinese clients is important for ARM not only because of the vast local market, but also because those companies are expanding their global presence.

Handset hopes

Ferguson said that while demand for smartphones is slowing, smartphone-related business will still be the largest contributor to the chip designers' revenue.

ARM shipped 16.7 billion chips in 2016. Ferguson said the company expects to deliver another 100 billion chips in the five years through 2021 by tapping the huge potential demand for connected devices for the automotive sector, smart homes and smart cities.

In July last year, Tokyo-based telecommunications powerhouse SoftBank acquired ARM for $32 billion. SoftBank Chairman and CEO Masayoshi Son said in a speech at the Mobile World Congress on Monday he purchased ARM in the expectation that it will deliver more than a trillion chips for connected devices in 20 years. He said he envisions these chips powering all kinds of smart computing units, which he speculated could be "100 times smarter" than the average human in a few decades.

When asked about the impact of the SoftBank acquisition, Ferguson said the Japanese company's support enables ARM to invest more internally, acquire more useful technologies and build a better ecosystem.

"We can certainly consider bigger acquisitions that we could not do as a separate company," said Ferguson. "We don't have to worry about quarterly profits [as a private company]. We can't be crazy, but we have more flexibility to make investment in the ecosystem."

ARM has already made some small acquisitions since joining the SoftBank family, recently buying Swedish company Mistbase and British players NextG-Com, both of which have expertise in cellular technology.

SoftBank Group Corp.

Japan

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