Cambridge chip designer Arm puts loss-making cyber security venture up for sale

Matthew Field 22 December 2019 • 5:00am

An Arm chip — Cambridge chip designer Arm has put a hardware security joint venture it launched in 2012 up for sale Credit: ARM Holdings

Smartphone chip designer Arm is courting bidders for its loss-making security joint venture as it continues its transformation under the ownership of SoftBank’s Vision Fund.

Trustonic, which makes security technology for smartphones and apps, was founded seven years ago as a joint venture between Arm and Dutch digital security company Gemalto.

Despite winning hundreds of clients, Trustonic has lost money every year. Last year, it lost €8.3m (£6.4m) on revenues of €9.9m. So far this year it has taken on loans of €8.4m from its two shareholders to fund the business.

The decision by Arm and Gemalto to offload Trustonic was revealed in a regulatory filing. It comes as Simon Segars, Arm’s chief executive, plots a return to the public markets after SoftBank’s £24bn buyout in 2016.

Trustonic said: “The current shareholders of the business have decided to make the business available for sale.”

The company this weekend declined to comment on a valuation, although company documents suggested its last fundraising valued it at about £60m.

The Cambridge-headquartered venture has 80 staff and is led by former Arm executive Ben Cade. It offers hardware security technology and has been used to secure two billion devices worldwide.

Trustonic develops what it calls a “trusted execution environment”, essentially a secure area of a microchip processor that stores sensitive data. It is used by nine of the top 10 Android smartphones.

It counts among its clients South Korean phone-maker Samsung, China’s Huawei, chipmaker Nvidia, Sony and Motorola.

Its technology has been used to develop secure fingerprint scanners for smartphone makers and is also used by app makers to store sensitive user data on a device, such as for securing a keyless car entry app developed by Volkswagen.

Mr Cade declined to comment on the progress of the sale process, but said: “We need to grow the business. It didn’t make sense any more to do this as a joint venture.”

Arm and Gemalto’s parent company Thales declined to comment.