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ARM eyes security firm with focus on Internet of Things, report says

The chip designer is reportedly in talks to spend about $80 million on Israel-based Sansa Security, which would help it compete in the growing market for connected devices.

ARM could have its sights set on Sansa for IoT. ARM

Chip designer ARM could be looking to acquire a mobile security company that specializes in the burgeoning market for the Internet of Things -- which puts computer chips in everday objects -- according to a new report.

ARM is in talks to acquire Israel-based Sansa Security for between $75 million and $85 million, The Wall Street Journal reported on Monday, citing people who claim to have knowledge of the negotiations. The deal could close as early as this month, according to the report.

ARM designs chips that are found in 95 percent of the world's smartphones. Sansa provides a security platform for Internet of Things (or IoT) devices, or products that have historically been "dumb," like refrigerators or washers and dryers, but with help from the Web, can connect to the Internet and become "smart." Although the companies seem incompatible, a core component in Sansa's security platform is a "silicon" layer that incorporates security features in the chip running in IoT devices, making it a potentially viable option for ARM as it looks to expand its business.

On Monday, ARM announced a new hardware "subsystem" that will expedite the development of customized chips for IoT devices. That subsystem works with the company's "mbed" operating system that it hopes, will power IoT devices in the coming years.

It's possible that ARM is eyeing Sansa as a complement to both mbed and its broader chip technology by incorporating its security features from the hardware to the software. Indeed, one of the core "design principles" in mbed is to "make end-to-end security standard, and simple," according to the initiative's website. Sansa has a platform that claims to deliver just that.

If ARM makes a move for Sansa, it would be just the latest in a string of moves in the chip business. Last week, chipmakers Avago and Broadcom announced plans to merge in a deal valued at $37 billion. On Monday, Intel said that it would acquire chipmaker Altera for $16.7 billion.

While ARM is not a chipmaker -- it designs the technology that companies like Qualcomm and others produce -- the company has significant opportunity to design chips in the IoT space. Analyst firm Gartner said earlier this year that the number of networked devices will soar to roughly 26 billion units by 2020, up from about 900 million in 2009. Another research firm, the International Data Corporation, says that the Internet of Things market will see revenue exceed $3 trillion by 2020.

Both ARM and Sansa declined to comment on the report.