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SoftBank

Arm scraps transfer of Internet of Things units to SoftBank

UK chip designer to keep businesses as subsidiaries

Arm, SoftBank's U.K.-based chip design unit, has canceled plans to transfer its IoT and data analytics businesses to the parent company, opting instead to let them operate independently.   © Reuters

TOKYO -- U.K. chip designer Arm on Tuesday said it has scrapped the planned transfer of its Internet of Things businesses to parent company SoftBank Group.

In July, Arm announced that it would transfer its IoT platform and data analytics businesses, which currently operates under a division called the IoT services group, to SoftBank by September. The move was meant to enable Arm to focus on its main semiconductor design business, CEO Simon Segars said at the time.

On Tuesday, Arm said the two businesses will instead be spun off as independent companies but will continue to be owned by Arm.

"[A]fter further diligence, we have determined that both [the IoT platform] and data can realize the same benefits as independent operating businesses, each with their own P&L (profit and loss), under the Arm Limited umbrella with less operational disruption," the company said in a statement.

The move comes as SoftBank weighs a possible sale of the chip designer. SoftBank Chairman and CEO Masayoshi Son recently said the company is in talks for a partial or complete sale of Arm, and is also considering taking the company public around 2023.

SoftBank bought Arm in 2016 for about $32 billion. The following year it set up the IoT services group as Son looked to expand Arm's chip design business beyond its mainstay smartphone market, where it dominates.

Son recently acknowledged rapid growth in shipments of Arm-designed chips has come mostly from IoT chips, but that this had not translated into earnings growth because they are less profitable than smartphone chips. Son said he is anticipating a new generation of smartphone chips to hit the market around 2023.

Stream Technologies and Treasure Data, which Arm had acquired as part of its move into IoT services, were both loss-making, according to Arm's financial statement for the year ended March 2019.

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