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The strategic partnership could help Samsung gain an edge in the non-memory chips market and close its gap with the Taiwan Semiconductor Co.
On Thursday, September 22, SoftBank CEO Masayoshi Son said that they are looking for a “strategic alliance” between chip maker Arm and tech giant Samsung. To broker the deal, the billionaire shall be paying a visit soon to Seoul for the first time in three years.
“I’d like to talk with Samsung about a strategic alliance with Arm,” Son said. The development happens after Samsung’s Vice Chairman Jay Y. Lee’s comments that Son could initiate the partnership talks next month.
Back in 2016, SoftBank acquired Arm in a $32 billion deal. The Arm chipmaker powers some of the finest gadgets including the Apple iPhone and other smartphones. At one point, SoftBank was also willing to sell Arm to Nvidia. However, this proposition faced industry opposition as well as regulatory hurdles.
Also, there have been ongoing speculations of forming an industry consortium to invest in Arm and keeping it neutral. Speaking to Reuters, Lee Min-hee, an analyst at BNK Investment & Securities said:
“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. “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”.
Monetising Arm Is a Priority for SoftBank
The biggest priority for SoftBank as of now could be monetizing Arm. SoftBank’s Vision Fund reported a staggering $22 billion during the second quarter of 2022, the largest quarterly loss ever for a Japanese company. The company had to sell its stake in Alibaba Group Companies to raise cash.
SoftBank is also planning for a US listing of Arm on the Nasdaq index. However, it comes at a time when the Philadelphia SE Semiconductor Index is down by around a third for the year to date.
But a partnership with Arm could be fruitful for Samsung as well since it gives the tech giant a greater edge in the semiconductor industry. Although Samsung has the largest market share in memory chips, it is still trying to catch up with the Taiwan Semiconductor company in logic chips.
Also, Arm can provide its application processor architecture for non-memory chips, a key area where Samsung is lacking.