Arm holdings are responsible for creating the processor chips that accompanies virtually every mobile device in the world, including the Apple iPhone and iPad. This week there have been rumors of an acquisition at ARM, with the potential buyer being none other than Apple. If successful with the acquisition, this could have big implications for the rest of the mobile industry, as Apple could potentially restrict the use of ARM technology to increase its competitive advantage in the market.

The London Evening Standard has responded to speculation that city traders are buzzing with news that an acquisition could be on the cards. Yesterday, shares in ARM increased by 8% as the news broke. From Apple’s perspective, cash reserves of $41 billion would make the deal entirely plausible.

So how do Apple potentially benefit from an acquisition of ARM? There are two key strategic advantages if the deal goes ahead.  Firstly, it gives Apple an increased level of control over the direction of each mobile processor and enables them to manage things in-house. Secondly, and perhaps more worryingly for the likes of Google, it would give Apple the ability to control and restrict the distribution of the processors into markets that potentially threaten Apple’s seemingly unmovable position in the mobile space.

From a competitive standpoint, this could force other mobile companies to use inferior processors in their products, thus increasing Apple’s hold on the market place. This is of course purely speculative and we will keep you updated as things develop.

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