Written by Sam Nossi and Joyce Lee
TOKYO/SEOUL (Reuters) – Masayoshi Son, founder and CEO of SoftBank Group, said he plans to meet with Samsung Electronics (OTC 🙂 to discuss a potential “strategic alliance” between the South 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 followed comments made by Samsung Vice President Jay Y. Lee, who was quoted by Newswire News1 as saying that Son “may make a proposal” on an expected visit next month. Samsung declined to comment on the report.
SoftBank acquired Arm, whose technology powers Apple’s iPhone (NASDAQ 🙂 and nearly every other smartphone, in 2016 for $32 billion. A subsequent proposed deal to sell Arm to Nvidia (NASDAQ:) sparked industry opposition and was bogged down by regulatory hurdles, prompting SoftBank to make plans to list the Cambridge-based company in the United States.
The visit comes amid speculation about the possibility of forming an industrial consortium to invest in Aram and ensure its neutrality.
“There should be someone in the middle mediating to bring several companies together in a consortium, and maybe Son will try to play such a role,” said Lee Min Hee, an analyst at BNK Investment & Securities.
He added: “It may be a possible suggestion that companies interested in owning a portion of Arm could go into a pre-IPO at a lower price before next year’s IPO.”
Monetising Arm has become a constant concern for executives at technology group SoftBank, which incurred a huge loss in its investment arm Vision Fund and sold its stake in Ali Baba (NYSE: Group Holding to raise cash.
However, efforts to include the chip designer come amid a significant drop in deal-making as markets are volatile due to rising interest rates and Russia’s invasion of Ukraine. The Philadelphia 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 is investing heavily in memory chips to try to catch up with Taiwan Semiconductor Manufacturing Co. in logic chips.
The South Korean conglomerate is still seen as hampered by technical limitations in original non-memory chip technology such as the application processor architecture, which Arm specializes in.
Other potential arm suitors include Intel Corp (NASDAQ :), CEO Pat Gelsinger expressed in February his desire to join 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 Jong-ho as saying in March that the chip maker was considering forming a consortium to buy Arm. The company said at the time that the comment did not indicate a specific plan.
Qualcomm (NASDAQ:) Inc, also cited as a potential investor, is being sued by Arm, which it accuses of breaching licensing agreements and trademark infringement.
The controversy could cast a shadow over Arm List, Redex Research analyst Kirk Bodry wrote in a note to clients.
“Arm probably needs all of its customers in tandem to get an excellent rating,” he said.