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ARM designs to power 100bn chips over 4 years, CEO says

SoftBank unit foresees explosive market growth as 'internet of things' takes root

TOKYO -- Some 100 billion chips built on ARM Holdings technology will be shipped in the next four years, as many as in the company's entire history so far, thanks to demand tied to the so-called internet of things, CEO Simon Segars told The Nikkei here Thursday.

"We are looking to build this platform of technologies," Segars said -- a "computing platform that all of these applications will rely on."

The British chip developer, which was founded in 1990, is shifting focus from smartphone-related to IoT-related products, which Segars considers the future. ARM is working with Qualcomm of the U.S. and China's Huawei Technologies to develop server chips, he said. Demand for these products has skyrocketed with the growth of the internet of things.

SoftBank Group announced around a year ago that it would purchase ARM for roughly 24 billion pounds ($31.1 billion at current rates). The British company has ramped up investment under its Japanese parent, increasing its head count from under 4,000 at the end of 2015 to over 5,000. Many of the new hires are engineers.

"We have offices in major technological centers around the world," Segars said. "We have sales and support and marketing close to our customers."

Before its acquisition by SoftBank, ARM was a listed company and faced shareholder pressure to focus on short-term strategy. "We have more freedom to invest" now, Segars said. He expects costs to grow faster than revenue over the next few years as it invests more in order to develop better technology in the future.

ARM's IoT-related products are roughly divided into microcontrollers, networking chips and central processing units for servers. The company is particularly focused on the third area, now dominated by U.S.-based Intel, as the growth of the internet of things boosts demand for data processing.

SoftBank Chairman and CEO Masayoshi Son considers ARM a core operation. ARM boasts a 90%-plus market share in smartphone processors, thanks to its energy-saving chips and its ability to develop effective software. The hope is that it will become the de facto standard for IoT-related chips as well. But ARM faces heavy competition from chip companies and rival developers to create products compatible with a wide range of devices.

"We have a much stronger ecosystem and the ability to invest much more" in research and development, Segars said, showing his optimism. "Some of the devices that will be needed for next-generation applications are very, very complex."

Given SoftBank's primary focus on communications technology, the ARM deal has not yet generated much in the way of synergies. But the acquisition was intended as part of a longer-term strategy.

There are signs that it could start paying off soon. Softbank launched a $93 billion fund in partnership with a Saudi Arabian sovereign fund to invest in a number of startups in the internet of things, artificial intelligence, and robotics.

By discussing challenges that still seem far off, "we can think about how our road map will evolve to solve" computing problems, Segars said.


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