A big tech deal was announced between two international companies today. Japan-based SoftBank bought UK-based ARM for $32 billion, a sentence that’s meaningless to most of us. But put another way, it starts to make a whole lot more sense: the company that owns Sprint just bought the company that makes the parts that make your iPhone actually work.

As the Wall Street Journal reports, the all-cash deal is a big move for the company’s CEO, Masayoshi Son. In a statement about the deal, Son said, “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.”

He added, “This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”

So why is this company worth $32 billion?

ARM is one of the UK’s largest tech companies. The business, which opened in 1990, doesn’t manufacture computer chips… but it does design their core architecture, and almost everyone you’ve heard of in the tech and mobile market licenses those designs.

One of the world’s biggest users of ARM architecture is Apple, which puts its native ARM-based chips into everything from the early iPods to the newest iPads, and all the iPhones in between.

Lest you think this only matters to iPhone users, though, think again: The ARM architecture is also used in Qualcomm’s Snapdragon and Krait processors, which power a wide array of Windows and Android phones including Samsung’s flagship Galaxy S line of devices.

A graph from tech site ReCode shows that by 2015, there were about 15 billion (yes, with a b) chips out there in the wild using ARM technology… and the company’s still going.

In short: everyone who buys any smartphone and probably any other mainstream Internet of Things device is probably going to see some of their pennies working their way to ARM and, now, to SoftBank.

When you think of it that way, it’s easy to see why SoftBank would want to snap ARM right up. Every “smart” device has to come with a brain, so to speak, and those brains are made by ARM. It’s not just consumer goods, either, but industrial devices and even infrastructure.

So SoftBank now has an entry into basically all the things, present and future, that will define the actual Internet Of Things. And for that kind of reach, $32 billion may prove a small price to have paid.

SoftBank to Buy ARM Holdings for More Than $32 Billion [Wall Street Journal]

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