Arm Holdings Plc said today it’s going to spin off its two “internet of things” chip businesses and transfer them to its parent company SoftBank Group Corp.

Arm said it will hand over its IoT Platform and Treasure Data businesses to SoftBank in order to focus exclusively on the semiconductor intellectual property business that has helped it become ubiquitous in mobile devices.

The transfer of the IoT Services Group businesses is still pending review from the company’s board, and will also have to face standard regulatory reviews. However, Arm said it’s confident the transfers will be completed by about September.

The move would effectively remove ISG from Arm’s brand, but the businesses will still collaborate with one another, Arm said. However, the spinoff plan doesn’t involve Arm’s IP for IoT chips.

“Arm believes there are great opportunities in the symbiotic growth of data and compute,” said Chief Executive Officer Simon Segars. “SoftBank’s experience in managing fast-growing, early-stage businesses would enable ISG to maximize its value in capturing the data opportunity. Arm would be in a stronger position to innovate in our core IP roadmap and provide our partners with greater support to capture the expanding opportunities for compute solutions across a range of markets.”

SoftBank purchased Arm back in 2016 for about $31 billion, saying at the time that it was enthusiastic about the growth prospects within the IoT market. Arm followed up by acquiring Treasure Data Inc. in a deal that was valued at about $600 million in 2018, before immediately launching its Pelion IoT platform that enables end-to-end connectivity, device and data management.

Analyst Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE the spinoff is probably linked to Arm’s plans to launch an initial public offering within the next few years.

“It makes a lot of sense given the desire to show the right level of profitability,” Moorhead said. “These two businesses are 10-year investments and I believe they will work better with SoftBank, where they can receive the right kind of attention.”

Arm’s main business, meanwhile, is going full steam ahead. The company recently achieved a major victory when it was announced that Apple Inc. is planning to transition from x86-based chips in its Mac computers to its own processor based on Arm’s designs.

Arm is also gaining traction in the data center with Amazon Web Services Inc.’s launch of its Arm-based Graviton2 processor. Meanwhile, SiliconANGLE’s sister market research firm Wikibon has forecast a bright future for the company in the enterprise, saying that it expects Arm-based processors to power 72% of new enterprise servers by the end of this decade.

Photo: Kārlis Dambrāns/Flickr