Samsung Electronics Vice Chairman Lee Jae-yong made a megaton comment saying, “I think SoftBank Chairman Son Jeong-eui will propose a joint acquisition of ARM next month.” For the first time, the possibility of Samsung Electronics acquiring ARM, which has been hovering underwater, has been announced. It signals a major deal and battle between companies over the acquisition of ARM, which may cause a seismic shift in the global semiconductor industry. GDnet Korea hurriedly listened to the expert opinion and checked the ARM big deal scenario. [편집자주]
It has been confirmed that Japan’s SoftBank Group (SB), which withdrew its plans to sell ARM in February this year, is adjusting its ARM exit strategy, which has been free for several months through a collaboration with Samsung Electronics.
Samsung Electronics Vice Chairman Lee Jae-yong, who returned from a business trip to the UK on the 21st, said, “Chairman Son Jeong-eui (SoftBank) will come to Seoul next month to make an ARM-related offer .” “We are discussing a strategic alliance between Samsung Electronics and ARM,” he said.
After failing to sell ARM in February, SoftBank aimed to list ARM on the New York Stock Exchange in the US and the London Stock Exchange in the UK by the end of March next year. Nevertheless, the British government has shown a difference of opinion with Softbank by insisting that it be listed on the London Stock Exchange first.
In addition, major semiconductor companies such as Intel, Qualcomm, and SK Hynix have announced their intention to participate in the ARM acquisition consortium since last February, but this is also sluggish. Accordingly, there is a possibility that SoftBank may ask Samsung Electronics to lead the formation of a consortium or participate in the consortium.
■ SoftBank acquires ARM for 38 trillion won in 2016… Failed to sell to Nvidia
SoftBank acquired ARM in 2016 at a cost of £17 per share (about $21.79), for a total of $32 billion (about 38 trillion won) of the 1.41 billion shares owned by ARM shareholders. At the time, Chairman Son Jeong-eui said, “IoT is an opportunity, and considering ARM’s future growth potential, it was acquired at a low price.”
However, the growth of the IoT market did not meet SoftBank’s expectations. In the end, ARM decided to move its IoT business divisions, ‘IoT Platform’ and ‘IoT Treasure Data’, to affiliated companies of SoftBank Group, leaving only the semiconductor design division in ARM.
Softbank has been considering selling ARM several times since then. In September 2020, it tried to sell ARM for a total of $40 billion (about 47.9 trillion won) including Nvidia stock and cash, but it was withdrawn due to objections from global semiconductor companies around the world and the disapproval of competition authorities in each country. .
■ Continued pressure from the British government ahead of the listing deadline in March next year
SoftBank has been pursuing a plan to recoup the investment by listing ARM on major stock markets around the world after the failed sale of ARM. SoftBank is thirsty for cash, posting losses due to successive investment failures. However, there is still a difference of opinion between SoftBank, which prefers a listing in New York, and the British government, which wants a listing in London.
In February, SoftBank announced in a press release immediately after withdrawing from selling ARM with Nvidia, “It will list ARM by the end of March 2023, when the 2022 fiscal year ends.”
Combining major foreign media reports so far, SoftBank aims to be listed on the New York Stock Exchange (NYSE) in the United States.
On the other hand, the UK government continues to insist that ARM be listed first on the London Stock Exchange (LSE).
According to The Guardian on the 16th, Prime Minister Liz Truss, the successor to former British Prime Minister Boris Johnson, who resigned in July, is also demanding that ARM be listed on the London Stock Exchange first.
■ ‘Total sales’, which has already failed once, is unlikely to try again
SoftBank Chairman Son Jeong-eui said on the 22nd, “I am looking forward to my first visit to Korea in three years, and we will discuss the strategic alliance between Samsung Electronics and ARM.” However, it can be seen that the number of cards that Chairman Son can bring under the name of ‘strategic alliance’ is very limited.
Some are predicting the possibility of Samsung Electronics acquiring ARM. In fact, Samsung Electronics currently has about 120 trillion won in equivalent cash. As long as it gets the board’s approval, there’s nothing wrong with just acquiring ARM, at least in theory.
However, the entire sale of ARM is a scenario that has already failed once at the box office due to the merger review of each country’s competition authorities and opposition from the semiconductor industry. It is difficult for Softbank, which is well aware of this, to try the adventure of changing ‘actors’ only from Nvidia to Samsung Electronics.
Samsung Electronics is also intertwined with Qualcomm, Microsoft, Google, Tesla and Amazon, which opposed Nvidia’s acquisition of ARM in the past, as major customers or suppliers. Notably, Samsung Electronics itself has voiced opposition to Nvidia’s ARM acquisition in the past.
■ SoftBank may ask Samsung Electronics to lead a consortium
On the other hand, if a large semiconductor company interested in ARM participates in a consortium and acquires ARM stock or invests in ARM at a certain percentage, controversy such as privatization or fair competition can be avoided. Since February, right after the sale of ARM, major semiconductor companies such as Intel, Qualcomm, and SK Hynix have announced that “if a consortium is formed, we will start securing a stake in ARM.”
However, until now, after half a year, nowhere has the composition of the consortium been revealed. This is because it is not easy to agree on how much of a share each company will invest and who will take the lead in the consortium. This is the same situation as ‘putting a bell on a cat’s neck’ in Aesop’s fables.
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Therefore, it could be more realistic for SoftBank Chairman Sohn to lead the formation of a consortium for Samsung Electronics to secure a stake in ARM or to request participation in the consortium through this visit.
However, it is clear that SoftBank also has to offer Samsung Electronics something in return for its equity investment and consortium leadership. In next month’s meeting between Vice Chairman Lee Jae-yong and Chairman Son Jeong-eui, this ‘return payment’ is expected to be an important item on the agenda.
