ARM Buys Apical

ARM completed its acquisition of Apical Ltd. for $350 million in cash. Apical provides embedded computer vision and imaging technology, which ARM said has been utilized in more than 1.5 billion smartphones and in about 300 million other consumer and industrial devices, such as digital still cameras, Internet protocol cameras, and tablet computers.

Apical has two main products: the Assertive Camera line of image signal processors and subsystems, and the low-power Assertive Display advanced display management core. It also offers the Spirit engine, which virtualizes raw sensor data or video, and is comprised of silicon intellectual property blocks with embedded firmware, for what the company calls “embedded-at-the-edge” technology.

The company employs field-programmable gate arrays for the low-power Assertive Camera range, offering full reference systems on Altera’s Stratix FPGAs and production cameras based upon Altera’s Cyclone and Xilinx’s Spartan devices.

Apical was established in 2002 and employs about 100 people, most of whom work at a research and development facility in Loughborough, England. ARM has hired all of Apical’s employees, 80% of whom are engineers, and 30% of whom have Ph.Ds in imaging and related fields.

Apical and ARM have collaborated for two years on display products. “Apical technology will support ARM’s long-term growth strategy,” ARM said in a company presentation on the acquisition.

The computer vision and imaging product market is forecast to reach $35 billion in 2018, according to a study by Tractica, a market intelligence firm based in Boulder, Colo.

ARM said the Apical acquisition bolsters its portfolio in intelligent image processing and will prove complementary to its Mali line of display, graphics and video processor cores. Potential applications include autonomous vehicles, mobile devices, robotics, and security systems.

“The acquisition makes sense strategically,” Robert Lamb of Jefferies & Co. told Dow Jones Business News.

Michael McConnell of Pacific Crest Securities currently rates ARM’s stock as “overweight,” meaning it will likely outperform the semiconductor industry sector in the next six to 12 months, on the basis of the company’s strong first-quarter results.

In trading on the Nasdaq Global Select Market, ARM’s stock surged this morning, increasing nearly 4% from yesterday’s close of $39.89 a share. The stock cooled off later in the day, showing a gain of about 1% late in Wednesday’s trading session.