Jan 8, 2020

Arm CEO: SoftBank deal lets us focus less on profit

Photo: CHARLY TRIBALLEAU/AFP via Getty Images

It's rare to hear a CEO talk proudly about bringing profit margins down, but Arm chief Simon Segars says that's just what his company's 2016 acquisition by SoftBank has allowed him to do.

Why it matters: Arm-based chips have found their way into nearly every smartphone. Freed from having to satisfy shareholders with hefty profits, Segars says that under SoftBank, Arm can focus on investing, in hopes of finding similar dominance in the cars and smart devices of the future.

For those not familiar, Arm doesn't make chips, but licenses its processor designs to companies like Qualcomm, Nvidia and Apple that use it as the starting point for their own chips. It was acquired for $32 billion by SoftBank in 2016.

As a public company, Segars said, Arm had roughly 50% percent operating margins. Now those margins are about 10%.

"I don't know of companies that do that successfully in public markets. It would be very hard."
— Segars, in an interview with Axios

It's not about making less money in the long term, of course, Segars said, but rather about investing so that it can gain a bigger foothold in areas like cars.

As Arm doesn't make the actual chips, most of that investment is in people. The company is now around 6,500 employees, up from 4,500 when it was acquired by SoftBank.

What's next: Segars said Arm is focused on the long-term impact 5G will have on businesses and in connecting all manner of devices, as well as making sure its designs are used throughout the connected car.

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Sequoia Capital's peacetime war chest

Photo: Smith Collection/Gado/Getty Images

Sequoia Capital two years ago made a decision that stunned many of its VC peers and limited partners: It would raise a whopping $8 billion for its third global growth fund, in an effort to defend both itself and its portfolio companies from SoftBank Vision Fund.

The plan: Sequoia still wouldn’t have SoftBank’s aggregate firepower, but it would have enough to compete for follow-on deals within its own portfolio, and to fund pro rata checks in SoftBank-led deals.

Go deeperArrowJan 21, 2020

What's happened so far at CES 2020

Illustration: Sarah Grillo/Axios

There will be a ton of tech news coming out of Las Vegas this week, and Axios has you covered with all the big news in one place.

The big picture: The biggest products of the year tend to be announced elsewhere, but in terms of sheer volume of consumer tech news, CES is still unmatched. For more on what to expect, check out this preview story. And check back all week for the latest from the Axios tech team.

Go deeperArrowUpdated Jan 8, 2020

European Union investigating Qualcomm over 5G

a 5G exhibition at the Qualcomm booth during CES 2019. Photo: Robyn Beck/AFP via Getty Images

Along with quarterly earnings, Qualcomm disclosed on Wednesday that European regulators are investigating whether the wireless giant leveraged its position in the 5G modem business to boost its position in radio frequency chips.

Context: Qualcomm has tangled frequently with regulators around the globe. It has faced previous issues in Europe and a settled probe in China, and is now fighting an unfavorable ruling in the U.S.