Masayoshi Son, the chairman of SoftBank and Arm Holdings, plans to visit South Korea in October for the first time in three years to discuss a potential strategic alliance between Arm and Samsung, SoftBank revealed.
"I am looking forward to the trip," Son said through a SoftBank spokesperson, according to Bloomberg. "I want to discuss a strategic alliance for Arm with Samsung."
Neither the head of SoftBank nor representatives for the company disclosed any further details, but the very mention of strategic nature of the meeting and the fact that the head of the holdings firm is traveling himself quickly inspired speculation that Masayoshi Son wants to sell Arm to Samsung. The rumors were further stirred up by Samsung vice chairman Jay Y. Lee, who confirmed the meeting.
"When chairman Son comes to Seoul next month, he will likely make a sort of proposal about Arm," Lee told journalists on Wednesday at Gimpo Airport after coming back from his two-week tour to Europe, reports the Korea Economic Daily.
Earlier this year the planned sale of Arm to Nvidia collapsed following an uproar of Arm's customers, such as Qualcomm, as well as a legal action against the merger by the U.S. Federal Trade Commission. After the deal fell apart, SoftBank focused on initial public offering (IPO) of Arm at New York Stock Exchange in 2023 pursuing a valuation of at least $60 billion, but with a plan to keep controlling stake in Arm Limited amid a slump of semiconductor stocks based on the Philadelphia Stock Exchange Semiconductor Index — a modified market capitalization-weighted index composed of semiconductor companies.
The SOX index is still at its nearly 12-month low and with sales of processors and memory declining more significantly than expected just a few months ago, it is unlikely to recover any time soon. As a result, SoftBank probably has reasonable doubts that it can seek a $60 billion valuation for Arm Limited in an early 2023 IPO. In this scenario, selling Arm (or at least its part) to Samsung (or even a conglomerate of companies led by the South Korean giant) may make more financial sense to SoftBank. In fact, the Japanese company could even use negotiations with Samsung in order to increase value of Arm in the eyes of other buyers.
For Samsung, Arm is strategically important. The company uses CPU architectures and cores designed by Arm in its system-on-chips for smartphones, advanced consumer electronics, PCs, and a host of other products. In fact, even Samsung's SSD controllers use Arm Cortex-R processor cores and importance of those cores for the storage market — one of Samsung's important businesses — will only grow in the coming years as storage gains computing capabilities.
Buying Arm would make Samsung a CPU and GPU powerhouse overnight, which might be a relief for the company that has consistently failed to build its own competitive Arm-based CPU cores. But there is no guarantee that such a deal will be cleared by regulators and will not be opposed by Arm's clients or organizations like the U.S. Federal Trade Commission. Meanwhile, buying a part of Arm to ensure that a rival does not gain control over the IP developer might make sense for Samsung.