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SoftBank Wants To Bring Samsung And Arm Together In A "Strategic Alliance"

SoftBank Wants To Bring Samsung And Arm Together In A "Strategic Alliance"
Masayoshi Son, the founder and CEO of SoftBank Group Corp, announced on Thursday that he would meet with Samsung Electronics to talk about a possible "strategic alliance" between the South Korean technology behemoth and chip designer Arm.
The billionaire's trip to Seoul will be his first in three years. Son stated in a statement, "I'd like to speak with Samsung about a strategic partnership with Arm.
The declaration comes in response to comments made by Samsung Vice Chairman Jay Y. Lee, who was cited by newswire News1 as saying that Son "may make a proposal" during a visit anticipated for next month. there were no comments on the issue from Samsung. 
In 2016, SoftBank paid $32 billion to acquire Arm, whose technology powers Apple's iPhone and almost all other smartphones. Following a failed attempt to sell Arm to Nvidia due to regulatory obstacles and industry backlash, SoftBank announced plans to list the Cambridge-based company on the New York Stock Exchange.
The visit takes place as rumors about a potential industry consortium to invest in Arm and guarantee its neutrality are rampant.
"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.
Executives at tech conglomerate SoftBank are now primarily focused on monetizing the company, as the latter reported a significant loss at its investment arm Vision Fund and reduced its ownership of Alibaba Group Holding to raise money.
However, efforts to list the chip designer coincide with a sharp decline in dealmaking as a result of unstable markets brought on by rising interest rates and Russia's invasion of Ukraine. For the year so far, the Philadelphia SE Semiconductor Index has decreased by about a third.
As the market leader in memory chips invests heavily to try to catch up with Taiwan Semiconductor Manufacturing Co. in logic chips, a partnership with Arm might make strategic sense for Samsung.
Technical barriers in the original technology for non-memory chips, such as application processor architecture, which Arm specializes in, are still seen as hindering the South Korean conglomerate.
Intel Corp., whose CEO Pat Gelsinger expressed interest in joining a consortium to purchase the chip designer in February, is another potential buyer of Arm.
According to the Yonhap news agency, Samsung rival SK Hynix has also expressed interest in Arm. According to a quote from Vice Chairman Park Jung-ho, the chipmaker was considering forming a consortium to acquire Arm in March. At the time, the business declared that the remark did not refer to a specific strategy.
Arm is suing Qualcomm Inc., which has also been mentioned as a potential investor, claiming trademark infringement and license agreement violations. View More
Kirk Boodry, an analyst with Redex Research, warned clients in a note that the disagreement might have an impact on an Arm listing.
"Arm probably needs all its customers onside to command a premium valuation," he said.

Christopher J. Mitchell

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