September 27, 2022

The ARM and SoftBank Group branded board was shown at a press conference in London
An ARM and SoftBank Group branded plaque is shown at a press conference in London, Britain, on July 18, 2016.

SoftBank Group Corp founder and CEO Masayoshi Son said on Thursday he plans to meet with Samsung Electronics to discuss a potential “strategic alliance” between the South Korean tech giant and chip designer Arma.

The billionaire will make his first visit to Seoul after three years. “I would like to discuss with Samsung a strategic alliance with Arma,” Son said in a statement.

The statement followed remarks by Samsung Vice President Jay Y. Lee, who was quoted by Newswire News1 as saying that Son “could make a suggestion” about the visit expected next month. Samsung declined to comment on the report.

SoftBank bought Arm, whose technology powers Apple’s iPhone and nearly all other smartphones, in 2016 for $32 billion. A proposed deal to sell Arm to Nvidia has sparked industry opposition and hit regulatory hurdles, prompting SoftBank to outline plans to list the Cambridge-based firm in the US.

The visit comes amid speculation about the potential formation of an industrial consortium to invest in Arm and ensure its neutrality.

“There needs to be someone in the middle who mediates to bring various companies together into a consortium, and Son may be trying to play that role,” said Lee Min-hee, an analyst at BNK Investment & Securities.

“A potential proposal could be that companies interested in owning part of Arm could enter a pre-IPO placement at a lower price before the IPO next year,” he added.

Monetizing Arm has become a primary preoccupation for executives at tech conglomerate SoftBank, which posted a huge loss at its investment arm Vision Fund and sold its stake in Alibaba Group Holding to raise cash.

Efforts to list the chip designer, however, come amid a dramatic decline in dealmaking in markets that have been volatile due to rising interest rates and Russia’s invasion of Ukraine. The Philadelphia SE Semiconductor Index is down about a third for the year to date.

An alliance with Arm could be a strategic fit for Samsung as the memory chip leader invests heavily to try to catch up with Taiwan Semiconductor Manufacturing Co in logic chips.

The South Korean conglomerate is still held back by technical limitations in its original technology for non-memory chips, such as application processor architecture, in which Arm specializes.

Other possible suitors for Arm include Intel Corp, whose CEO Pat Gelsinger expressed interest in February in joining a consortium to buy the chip designer.

Samsung’s rival SK Hynix has also expressed interest in Arm, according to Yonhap news agency. It quoted Vice President Park Jung-ho as saying in March that the chip maker was considering forming a consortium to buy Arm. The company then said that the comment did not refer to a specific plan.

Qualcomm Inc, also cited as a potential investor, is suing Arm, which it accuses of breaching its license agreement and trademark infringement.

The dispute could cast a shadow over Arm’s listing, Redex Research analyst Kirk Boodry wrote in a note to clients.

“Arm probably needs all of its clients to get a top valuation,” he said.

Signage is seen at Samsung 837 in Manhattan, New York City
Signage is seen at Samsung 837 in Manhattan, New York, USA on November 23, 2021.
SoftBank Corp's logo is displayed at a press conference in Tokyo
The logo of SoftBank Corp is shown during a press conference in Tokyo, Japan, on February 4, 2021.

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