SoftBank Group’s $32 billion acquisition of U.K. chip designer ARM Holdings is a major move into the burgeoning Internet of Things (IoT) processor design market.

As reported by Ars Technica, the Japanese telecommunications giant says its decision to buy ARM is all about the potential growth in IoT globally.

“ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the Internet of Things,” said Masayoshi Son, chairman and CEO of SoftBank.

The deal is being touted as the largest ever Asian investment in the U.K. It lets ARM to stay headquartered in Cambridge and promises to double the company’s staff from its current complement of 4,000 employees over the next five years. ARM also gets to keep its senior management, brand and profitable partnership-based business model.

In exchange SoftBank gets access to ARM’s formidable storehouse of intellectual property. Currently in the mobile market, ARM estimates that processors based on its design can be found in 95% of the world’s smartphones.

SoftBank buying into IoT?

But as the global smartphone market levels off, SoftBank’s decision to shell out the big bucks was no doubt driven more by ARM’s growing intellectual property in the IoT space than from smartphones.

Specifically, ARM’s Cortex-M class of processors for embedded and smart devices are already out and generating revenue for the company. These processors power the elements that give smart devices their smarts, including sensors, microcontrollers and low-power wireless communication chips.

In fact, Cortex-M processors constituted over half of the new licenses ARM inked this past quarter.

The Cortex-M processors have become a core element in many of the smartwatches currently entering the market. As well, the processor is found in many fitness wearables such as Fuelcell and Fitbit.

ARM IoT technology is also turning up in smart city applications such as in San Francisco where processors based on its design allow parking spaces to “articulate” that they are available so that they can be reserved by a smartphone.

Donal Power