Estimating ARM's future earnings is relatively straightforward, and Softbank, like Berkshire, loves free cash flow. It doesn't require a visionary to go through the calculus of an acquisition under these parameters; it requires a team of shrewd finance professionals.
Intel CPU cost already way to much due to lacking competition from the only left x64 vendor AMD which is years behind. And Intel slowed down the release of faster CPUs. Where are the 8 and 16 core CPUs? Where are the 5+ GHz CPUs? Why hasn't the single core performance advanced that much (if you discount the advance of memory speed) since 2004 (Pentium 4 era).
AMD is coming with 32 cores - http://www.extremetech.com/extreme/222921-amd-is-supposedly-...
edit: I just looked; Intel has Haswell-based server processors with 24 physical cores[2]
[1] http://www.cavium.com/newsevents_Cavium_Introduces_ThunderX_...
[2] http://ark.intel.com/products/93790/Intel-Xeon-Processor-E7-...
It has, but you have to use AVX and other new instruction sets. Singlethreaded, a fifth-gen Core m5 tablet CPU can be as fast as a first-gen Core i Xeon workstation CPU, and a sixth gen i7 desktop CPU can be twice as fast as both: https://admin.tao.at/post/evolution-of-cpu-efficiency/
(Sadly I don't have any Pentium 4s left to compare on. And of the Core2 generation only laptops.)
Cinebench R10 32 bit single thread scores:
Intel Pentium 4 660 - 3.60 Ghz - 2245 Points
AMD Athlon X2 6000+ - 3.00 Ghz - 2848 Points
Intel Core2 Duo E8400 - 3.00 Ghz - 3647 Points
AMD Phenom II X6 1075T - 3.00 Ghz - 3820 Points
AMD FX 8320E - 3.20 Ghz - 4056 Points
Intel Core i7 950 - 3.06 Ghz - 4353 Points
Intel Core i7 3930 - 3.20 Ghz - 6268 Points
Intel Core i7 5960X - 3.00 Ghz - 6950 PointsA better traditional single thread benchmarks might be spec int base minus libquantum. That tests things like how good the branch predictors are relative to pipeline depth, how fast dependent instructions or pointer chasing can be handled, etc.
Would love to see someone do a benchmark like that (would do it myself if I had enough spare money), with equal clock and memory bandwith etc.
EDIT: after reading the critique about libquantum on wikipedia I'm even more interested in the benchmarks.
"In the SpecInt2006 benchmarks, the 462.libquantum benchmark is highly vectorizable. The baseline computer for all benchmarks is a 1997 Sun Ultrasparc server computer. Whereas most of the spec sub-benchmarks turn in a performance improvement of about 5x to 80x times faster than the Ultrasparc, the particular 462.libquantum sub-benchmark turns in a result that is up to 4082 times faster than the Sun Ultrasparc .[3] This suggests that for this sub-benchmark, most of the improvements over the Ultrasparc are due to vectorizing compiler improvements, NOT due to CPU hardware improvements, since 1997."
I'm not sure Intel would want to also take full control of ARM chips regardless of Antitrust regulations.
Whoever buys ARM can keep collecting the licensing fees, perhaps even increase the fees a bit. No platform is particularly tied to ARM in the long run, they just use it because ARM chips are cheap, fast and power efficient. If Intel tried to change the ARM licensing deals in monopolistic ways, then everyone would simply move to new chips. For example, Android has always been reasonably platform agnostic with their Java layer and Apple have been introducing platform independant binaries.
Letting Intel have ARM would certainly be an antitrust situation given the sheer dominance Intel's I.P. would have at that point.
I assume you ask this question because ARM is absolutely killing Intel on mobile CPUs. Worse, Intel has tried to get into that space and ARM has handed Intel its head more than once. So this is not a dumb question.
But ARM makes a trivially small amount per CPU manufactured, making it up on volume. Intel takes a large amount of both revenue and profit on each piece silicon that goes out. And you can see the result: Intel's market cap is still 5X ARM's ($160 Bn to 30 Bn).
As an individual investor ARM is (was -- assuming this buyout goes through) probably a better investment than Intel since Intel is struggling to find new markets to expand into, with most of its revenue coming from a dead end business (PCs) while ARM is being pulled by many people into new, growth businesses. But because of its business model, an ARM acquisition would dilute Intel's results (its margin would drop).
For smaller companies it's OK to "eat your own lunch." This was in fact Sun's principle (which didn't work out for them so well) and Apple's (which has, so far). But when you get to be huge, it's hard to move the needle in a way that appeals to investors. Look at Apple: they have a crummy iPad business that, were it standalone, would be one of the phenomenal businesses of the decade. But when mixed in with the rest of Apple, it's simply blah.
==
Separately, I remain astonished that Intel killed its StrongARM business line. They definitely had the best ARM on the market and it played, I think, to their strengths. I think they were just afraid that it attacked their brand, which at the time was very expensive CPUs. But they could be dominating the mobile market now.
Well, ARM doesn't have those pesky chip fabs on their balance sheets, that's the licensee's problem. Accordingly, they have a profit margin of 30 percent, compared to INTC's 20.
> He's taking advantage of the weak GBP thanks to the whole Brexit fiasco.
SoftBank's net-debt-to-equity ratio has risen from 0.6 to 3.5 from FY2011 to 2015: http://www.softbank.jp/en/corp/irinfo/financials/results/hig....
That being said, SoftBank purchased ARM using GBP (I assume), so they would need a way to convert their cheaply acquired JPY to GBP. I wonder if they are able to purchase foreign companies for JPY at, say, a 10% markup. The sellers would be able to sell this JPY on the market as soon as they receive it, and SoftCorp would be left with a brand new company in its portfolio and some JPY liabilities (they are issuing unsecured, subordinated (5-year?) JPY bonds at 2.5% p.a.: http://www.softbank.jp/en/corp/irinfo/stock/bond/).
[1]: http://www.bbc.co.uk/news/business/market_data/currency/11/1...
[2]: http://www.bbc.co.uk/news/business/market_data/shares/3/8729...
For one, the young investment bankers and lawyers are accustomed to staying up late when there's a deal on. I used to live with one, and it was simply part of the job that the job was everything, all the time. Staying up an unhealthy amount is what they expect.
Also, this isn't a completely out-of-the-blue deal. Everyone in the M&A space would have given some thought as to which firms would potentially merge, and they would have made presentations to the bosses of the involved firms airing the pros and cons, the possible financials, the antitrust side, and various other issues.
In this case, at this size, my guess is they've been keeping tabs on ARM for a long time and maybe decided to just pull the trigger with Brexit going on.