(Bloomberg) -- Masayoshi Son has news for investors still reeling from SoftBank Group Corp.’s surprise $32 billion acquisition of ARM Holdings Plc -- the singularity is near.
The chief executive officer of the Japanese technology company took the stage at the annual SoftBank World conference in Tokyo to talk about this week’s announcement of his plan to buy the U.K.-based chip designer. ARM will play a key role in bringing about advanced artificial intelligence, he said. That could happen as early as 2018, when the number of transistors on a chip is projected to exceed the number of cells in a human brain, according to Son.
“I’ve been thinking about this nonstop for a year, and the answer I arrived at is ARM -- it’s an important move,” Son told an audience consisting of SoftBank employees, clients and media. “ARM will be the center of the center of SoftBank.”
So far, investors aren’t happy with the price tag on the company’s biggest-ever acquisition, which Son says is an investment in the future of connected devices, called the internet of things. SoftBank’s shares are down about 10 percent since the deal was announced, erasing about 750 billion yen ($7 billion) in market value, while the company faces the challenge of reducing its $100 billion-plus debt load and turning around money-losing U.S. unit Sprint Corp.
“People think this was a stupid move, they’ve voted with their money, shares fell,” Son said. “It’s easy to look at where your pieces are now and place the next one nearby. This one is 10, 20, 50 moves ahead.”
ARM focuses on small, low-power devices and doesn’t actually build semiconductors. Instead the company licenses its designs, which are used in most mobile phones, including every iPhone and Samsung Galaxy smartphone. Son is now gambling that the chips will find their way into self-driving cars, virtual-reality devices and machines with artificial intelligence.
Apple Inc., Google, Samsung Electronics Co., General Electric Co. and other tech giants have made early attempts to connect thermostats, washers and watches to the web. Whatever those devices will be, and whatever software runs on them, Son is wagering they will run on silicon designed by ARM. On Thursday, SoftBank and Honda Motor Co. unveiled plans to work jointly on artificial intelligence technology for cars.
“This will be the essential building block of the IOT ecosystem,” said Satish Lele, senior vice president at Frost & Sullivan in Singapore. “It’s a very good investment because of the existing business which ARM already has, but also coupled with the fact that IOT is going to be the next evolution across multiple industries.”
Son built SoftBank from a PC magazine publisher into a telecom giant with investments in e-commerce, energy and robotics by betting early on some of the pivotal technology trends of his time. The decision to buy ARM was more than 40 years in the making, said Son, who said he recalls when he first saw a picture of an integrated chip in a science magazine while still a student in University of California, Berkeley.
“My fingers and toes went numb. I couldn’t keep from crying,” Son said of that experience. “Finally, humanity was in the position to create an intelligence surpassing its own. What a tremendous impact this will have!”
--With assistance from Yuji Nakamura
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