© Reuters. Signage is seen at Samsung 837 in Manhattan, New York City, U.S., November 23, 2021. REUTERS / Andrew Kelly
By Sam Nussey and Joyce Lee
On Thursday, Masayoshi Son, founder and CEO of SoftBank Group, said he plans to meet with Samsung Electronics (OTC:) to discuss a potential “strategic alliance” between him Korean tech giant and chip designer Arm.
The billionaire will make his first visit to Seoul in three years. “I would like to speak with Samsung (KS:) about a strategic alliance with Arm,” Son said in a statement.
The statement follows comments from Samsung Vice President Jay Y. Lee, who was quoted by newswire News1 as saying Son “could make suggestions” during a visit scheduled for next month. Samsung declined to comment on the report.
SoftBank acquired Arm, the company that powers Apple’s iPhone (NASDAQ:) and nearly all other smartphones, in 2016 for $32 billion. A proposed deal then to sell Arm to Nvidia (NASDAQ:) has sparked industry outcry and entangled regulatory hurdles, prompting SoftBank to map out plans to list the Cambridge-based company. in America.
The visit comes amid speculation about the possibility of forming an industrial consortium to invest in Arm and ensure its neutrality.
“It takes a middle man to mediate to bring different companies into a consortium, and Son may be trying to close one,” said Lee Min-hee, an analyst at BNK Investment & Securities. such role.
“One potential proposal could be that companies interested in owning a part of Arm could participate in a pre-IPO offering at a lower pre-IPO price next year,” he added.
The Monetising Arm has become a top concern for executives at tech conglomerate SoftBank, which has posted a massive loss at the Vision Fund’s investment arm and sold off its stake in the company. Alibaba (NYSE 🙂 Group Holding to raise cash.
However, the attempt to shortlist the chip designer comes amid a significant decline in dealings with a volatile market caused by soaring interest rates and Russia’s invasion of Ukraine. The Philadelphia SE Semiconductor Index is down about a third for the year so far.
The alliance with Arm could be a strategic fit for Samsung as the market leader in memory chips invests heavily to try to catch up with Taiwan Semiconductor Manufacturing Company in the field of logic chips.
The Korean conglomerate is still seen as hampered by technical limitations in the early technology for non-memory chips, such as application processor architecture, which Arm specializes in manufacturing.
Other possible Arm suitors include Intel Corp (NASDAQ :), whose CEO Pat Gelsinger in February expressed interest in joining a consortium to buy the chip designer.
According to Yonhap news agency, Samsung rival SK Hynix has also expressed interest in Arm. It quoted Vice President Park Jung-ho as saying in March that the chipmaker was considering forming a consortium to buy Arm. The company said at the time that the comment did not mention a specific plan.
Qualcomm (NASDAQ:) Inc, also considered a potential investor, is being sued by Arm, alleging breach of license agreements and trademark infringement.
Redex Research analyst Kirk Bootry wrote in a note to clients.
“Arm probably needs all of its customers around to offer high valuations,” he said.