SoftBank looks to form a 'strategic alliance' between Arm and Samsung



(Writes through and changes media slug)

By Sam Nussey and Joyce Lee

TOKYO/SEOUL, Sept 22 (Reuters) - SoftBank Group Corp 9984.T founder and CEO Masayoshi Son said on Thursday he plans to meet with Samsung Electronics 005930.KS 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'd like to talk with Samsung about a strategic alliance with Arm," Son said in a statement.

The statement follows remarks by Samsung's Vice Chairman Jay Y. Lee, who was quoted as saying by newswire News1 that Son "may make a proposal" on a visit expected next month. Samsung declined to comment on the report.

SoftBank acquired Arm, whose technology powers Apple's iPhone and nearly all other smartphones, in 2016 for $32 billion. A subsequent proposed deal to sell Arm to Nvidia NVDA.O aroused industry opposition and foundered on regulatory hurdles, prompting SoftBank to outline plans for a U.S. listing of the Cambridge-based firm.

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

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

"A potential proposal could be that companies interested in owning a part of Arm can enter in a pre-IPO placement at a lower price ahead of an IPO next year," he added.

Monetising Arm has become a primary preoccupation for executives at tech conglomerate SoftBank, which has booked a massive loss at its Vision Fund investment arm and sold down its stake in Alibaba Group Holding 9988.HK to raise cash.

Efforts to list the chip designer, however, come amid a dramatic decline in dealmaking with markets volatile due to soaring interest rates and Russia's invasion of Ukraine. The Philadelphia SE Semiconductor Index .SOX is down by around 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 to try to catch up with Taiwan Semiconductor Manufacturing Co 2330.TW in logic chips.

The South Korean conglomerate is still seen as hampered by technical limitations in original technology for non-memory chips such as application processor architecture, which Arm specialises in.

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

Samsung rival SK Hynix 000660.KS 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 refer to a specific plan.

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

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

"Arm probably needs all its customers onside to command a premium valuation," he said.
Reporting by Sam Nussey in Tokyo and Joyce Lee in Seoul; Editing by Muralikumar Anantharaman and Edwina Gibbs

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.