March 30, 2023

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

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

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

The statement followed comments from Samsung Vice Chairman Jay Y Lee, who was quoted by Newswire News 1 as saying Son “may make an offer” during a visit expected next month. Samsung declined to comment on the report.

The SoftBank arm, whose technology powers Apple’s iPhone and nearly all other smartphones, was acquired in 2016 for $32 billion. A subsequent proposed deal to sell Arm to Nvidia sparked industry opposition and foundered on regulatory hurdles, prompting SoftBank to outline plans for a US listing of the Cambridge-based firm.

The visit comes amid speculation over investment in Arme and the possible formation of an industry consortium to ensure its neutrality.

“There needs to be someone as an intermediary to bring together different companies into a consortium, and son may try to play such a role,” said Lee Min-hee, an analyst at BNK Investment & Securities.

“One possible proposal could be that companies interested in owning a part of Arm could enter into a pre-IPO placement ahead of an IPO next year,” he added.

The monetizing arm has become a primary preoccupation for executives at tech firm SoftBank, which has taken heavy losses on its Vision Fund investment arm and sold its stake in Alibaba Group Holding to raise cash.

Efforts to list the chip designer, however, come amid a dramatic decline in deals, with markets unsettled by rising interest rates and Russia’s invasion of Ukraine. The Philadelphia SE Semiconductor Index is down nearly a third for the year to date.

An alliance with Arm could be a strategic fit for Samsung as the market leader in memory chips invests heavily in logic chips to catch up with the Taiwanese semiconductor manufacturing company.

The South Korean conglomerate is still seen as hampered by technological limitations in core technologies for application processor architectures such as memoryless chips, which Arm specializes in.

Other potential Arm suitors include Intel Corp, whose chief executive Pat Gelsinger expressed interest in February in joining a consortium to buy the chip designer.

Samsung rival SK Hynix has also expressed interest in Arm, according to Yonhap news agency. It quoted Vice Chairman 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 any specific plans.

Qualcomm Inc, also mentioned as a potential investor, is being sued by Arm, which accuses it of breaching license agreements and trademark infringement.

The dispute could cast a shadow over an arm listing, Redex Research analyst Kirk Boudry wrote in a note to clients.

“Arm probably needs a premium valuation to command all of its customer sides,” he said.

Signage seen at Samsung 837 in Manhattan, New York City
Signage is seen at Samsung 837 in Manhattan, New York City, U.S., on Nov. 23, 2021.
SoftBank Corp's logo is shown at a press conference in Tokyo
SoftBank Corp’s logo is pictured during a press conference on February 4, 2021 in Tokyo, Japan.

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