SoftBank Looks To Form A ‘Strategic Alliance’ Between Arm And Samsung
SoftBank Group 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 Arm.
The billionaire will visit Seoul for the first time in three years. “I would like to discuss a strategic alliance with Arm with Samsung,” Son said in a statement.
The statement followed a speech by Samsung Vice Chairman Jay Y. Lee, who was quoted by newswire News1 as saying Son expected to “probably make recommendations” when he visits next month. Samsung declined to comment on the report.
SoftBank bought Arm in 2016 for $32 billion, and the latter’s technology powers Apple’s iPhone and nearly every other smartphone. A subsequent proposed sale of Arm to Nvidia drew industry backlash and fell through regulatory hurdles, prompting SoftBank to draw up plans to list the Cambridge-based company in the U.S.
The visit comes amid speculation that an industry consortium could be formed to invest in Arm and ensure its neutrality.
“Someone needs to mediate in the middle 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 a portion of Arm could enter a pre-IPO placement at a lower price before the IPO next year,” he added.
The monetization unit has become a major focus for executives at tech group SoftBank, which has recorded huge losses in its Vision Fund investment arm and sold its controlling stake in Alibaba Group Holding Ltd. to raise cash.
However, trading volumes fell sharply amid volatile markets due to soaring interest rates and Russia’s invasion of Ukraine. The Philadelphia SE Semiconductor Index is down about a third so far this year.
A tie-up with Arm could be a strategic fit for Samsung, as the memory chip market leader is investing heavily in an attempt to catch up with TSMC in logic chips.
The South Korean conglomerate is still seen as a technical limitation of the original technology for non-memory chips, such as the application processor architecture that Arm specializes in.
Other possible Arm suitors include Intel Corp., whose chief executive Pat Gelsinger expressed interest in joining a consortium to buy the chip design company in February.
Samsung’s 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 specific plans.
Qualcomm, also listed as a potential investor, is currently being sued by Arm, alleging breach of a licensing agreement and trademark infringement.
That discord could overshadow an Arm launch, Redex Research analyst Kirk Boodry wrote in a note to clients.
“Arm may need all of its customers on the sidelines to get a premium valuation,” he said.