Masayoshi Son, the CEO of SoftBank Group, has said he intends to discuss a strategic alliance between Samsung and processor IP licensor Arm next month.
The nature of the alliance has not been revealed but it could either be part of an alternative to a planned IPO for Arm, or part of moves to give a consortium of licensees a chance to take a stake in Arm and bolster an IPO.
“I’m looking forward to visiting Korea for the first time in three years. I’d like to talk with Samsung about a strategic alliance with Arm,” Son is quoted saying in a statement.
Samsung has reportedly confirmed that a meeting with Son is due to take place but said it does not know any details of the proposal. “A strategic alliance is a vague and broad term. If he offers to sell Arm to us, we will have to consider it on a general basis,” the Financial Times quotes an unnamed Samsung executive as saying.
At present the plan of record is for Arm to float sometime before the end of 1Q23 either on the New York Stock Exchange or possibly in New York and London. The UK government has been lobbying for the London Stock Exchange to be included. This plan was put in place after an attempt by chip company Nvidia Corp. to buy Arm was blocked by regulators earlier this year (see Analysis: Arm CEO replaced as ‘unwanted’ sale to Nvidia cancelled).
IPO needs help
However, the outlook for company IPOs has turned down in recent months with falling stock markets amidst signs of a global recession. This recessionary dip has been prompted by economic shocks following the Covid epidemic, trade and political tension between the US and China and Russia’s invasion of Ukraine. Arm also has company-specific problems including a troubled relationship with its Chinese subsidiary and a festering legal dispute with key licensee Qualcomm (see ARM moves to regain control in China, clear path to IPO and Qualcomm hits back at ARM over lawsuit).
In his statement Son has resurrected the idea that Arm could be owned by a consortium of prominent licensees. This idea of a consortium to own Arm was raised as an alternative to an outright purchase for Arm by Nvidia back in 2021. At that time the idea failed to gain sufficient traction.
Ultimately Nvidia failed to get its takeover bid past regulators. This was partly because Arm’s business model depends on it being independent and able to supply multiple licensees on reasonable and non-discriminatory terms. It was not clear that once owned by a single licensee it would be able to do that. A proposal for Samsung to own Arm outright would face a similar problem.
However, a consortium that could include Samsung, SK Hynix, Qualcomm, Intel and others that takes a significant minority share could provide reassurance and improve the chances of a successful IPO despite the economic climate. Qualcomm proposed a consortium to own Arm as an alternative to an IPO back in April 2022 (see Qualcomm raises prospect of an Arm consortium – report).
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