Shulou(Shulou.com)11/24 Report--

Beijing, September 23 (Xinhua) after the failure of the sale to Nvidia, Softbank Corp. placed the future of its chip design giant ARM on IPO. However, the stock market is in poor shape and Softbank Corp. is now trying to raise the valuation of ARM before it goes public. To this end, Softbank Corp. Chairman and CEO Masayoshi son (Masayoshi Son) personally contacted Samsung Electronics to explore possible strategic cooperation.

Softbank Corp. has been under pressure to cash in on ARM after the flagship technology investment vehicle Vision Fund suffered record losses in the last fiscal year. In order to raise money, Softbank Corp. sold the rest of his stake in US car-hailing giant Uber in the second quarter and reduced his stake in Alibaba Group.

Meanwhile, global technology stocks have been hit hard in recent months, dealing a blow to Softbank Corp. 's plan to list ARM in 2022. Mr son has previously said he is "very active" in thinking about how to deal with ARM "almost every day".

However, son's search for a strategic partnership with Samsung is not without challenges. If ARM works with a particular chip company, it could face resistance from other customers and eventually threaten its control of smartphone chip design.

Masayoshi son, his first visit to South Korea after the epidemic, announced on Wednesday that he plans to visit South Korea in October for talks with Samsung. "I am looking forward to visiting South Korea for the first time in three years. I want to talk to Samsung about its strategic alliance with ARM." He said in a statement.

Son has been working in Tokyo since the COVID-19 epidemic began to spread, and the personal visit to Samsung showed his enthusiasm for potential cooperation.

Lee Jae-yong, the de facto leader of the Samsung group and vice-chairman of Samsung, said on Wednesday that Mr son "may put forward some proposal" during his visit to Seoul, "but I am not sure".

Son will meet with Lee Jae-yong

Son regards ARM as the "core" of Softbank Corp. Group, a chip design company whose products are basically the blueprints used by chip companies to finalize the design. ARM's products are popular because they are energy efficient. More than 90% of the world's smartphone processors are based on ARM intellectual property.

ARM is the "sole leader" in mobile chip design, according to a source familiar with the chip industry.

Why Samsung? Currently, Samsung is designing its own smartphone processors and is an important customer of ARM. Moreover, Samsung is also expanding its chip contract manufacturing business and opening up more cooperation opportunities.

As of the end of June, Samsung had 125 trillion won ($89 billion) in cash. The company is believed to be exploring acquisitions in chips to diversify its semiconductor product line and expand beyond areas such as memory chips and smartphone processors.

CW Chung, head of Asian technology research at Nomura, said that given that antitrust concerns had foiled an earlier acquisition attempt by Nvidia, it was highly unlikely that Samsung would buy all of ARM alone. "more likely, Samsung may seek to acquire part of ARM." He said. Another possibility, he said, would be for Softbank Corp. to sell a stake in ARM to Samsung before seeking an IPO for ARM.

The head of Samsung's domestic rival SK Hynix also proposed to buy ARM at the shareholders' meeting in March this year. Industry makers are expected to keep a close eye on the fate of the proposed partnership between ARM and Samsung.

The challenges are still big, but there are obstacles for ARM to work too closely with another semiconductor company. Strengthening ARM's relationship with a particular customer may trigger resistance from other customers because they fear that such a partnership will put them at a disadvantage.

ARM architecture chip has the advantages of energy saving and so on.

In September 2020, graphics processor company Nvidia announced a $40 billion acquisition of ARM. However, strong opposition from industry peers complicated regulatory scrutiny and eventually led to the failure of the deal.

The unrivalled status of ARM has raised concerns, prompting companies to look for alternatives. Many chip designers and manufacturers are interested in RISC-V, a free, open source instruction set architecture that may challenge Arm's dominance in this area. Some startups are already offering blueprints based on the RISC-V architecture. ARM's wrong move could scare off customers and squeeze their market share.

In addition, other companies have expressed interest in taking stakes in ARM. Qualcomm CEO Cristiano Ammon (Cristiano Amon), a big ARM client, said earlier this year that the company was interested in investing in ARM. In addition, analysts and media have speculated that the semiconductor industry may set up a consortium to acquire ARM.

Son said, "I hope people look forward to the growth of our core business." Whether it's IPO or working with Samsung, he is likely to face a difficult balance when planning the next step for ARM.

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