ARM chills Apple takeover rumors

ARM Holdings dismissed recent market rumors that Apple (NASDAQ: AAPL) might be considering a bid for the company.

The rumors, which first began circulating in the London Evening Standard, said Apple was considering a bid because it wanted to bring more chip expertise in-house. ARM licenses chip designs to semiconductor companies including Qualcomm (NSYE:QCOM) and Texas Instruments, and an ARM-based processor is in Apple's iPhone. Apple purchased silicon firm PA-Semiconductor in 2008 for $280 million as part of its efforts to build specialized chip components for its products.

The market chatter pushed ARM's shares to an eight-year high yesterday. However, ARM CEO Warren East subsequently cooled the issue by noting the economics of such a deal simply do not make sense. East said ARM's market capitalization of around $4.6 billion represented a major obstacle for a company to try and buy ARM when it could just license ARM's designs instead.

"Exciting though it is to have the share price pushed up by these rumours, common sense tells us that our standard business model is an excellent way for technology companies to gain access to our technology," East told the Guardian. "Nobody has to buy the company." An Apple spokeswoman did not immediately respond to a request for comment.

Apple is sitting on a cash hoard of $41.7 billion, which could have been a factor in sparking the market rumors. However, any bid for ARM would likely run into a host of challenges, since ARM supplies designs for many of Apple's direct mobile phone competitors.

For more:
- see this Guardian article
- see this Barron's blog post
- see this Fortune blog post

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