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Samsung considers Arm bid in form of an equity stake

by Mark Tyson on 4 August 2020, 12:11

Tags: ARM, Samsung (005935.KS), NVIDIA (NASDAQ:NVDA)

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An interesting report from South Korea indicates that Samsung is ready to join a semiconductor industry consortium to make a bid for chip design and licensing company Arm Ltd. Much of the recent industry buzz has been about the possibility of Nvidia's outright purchase of Arm, and the implications of such a deal for Nvidia and the wider industry. Now it appears that there have been talks in the background with a consortium of semiconductor companies all wishing to get skin in the game and ensure nothing will rock their boats.

The Korea Times says that Samsung will join the race to acquire the UK's Arm Ltd. It will do so by acquiring a small stake, between 3 and 5 per cent, as part of a consortium of semiconductor companies working together to ensure nothing untoward will happen with the Arm architecture or its licensing.

"Samsung Electronics is considering acquiring a small stake in Arm, which will be between 3 percent and 5 percent," said the top industry official, who requested to remain anonymous. "Arm will be acquired by a consortium led by multiple parties from the semiconductor industry given the complex nature of Arm's shareholding structure."

As way of explanation, the official went on to draw parallels between the above sketched out consortium acquisition idea with the way in which Samsung and other semiconductor makers have collected stakes in ASML Holdings in the Netherlands. ASML is in a similar market dominating and global leading position as Arm, as it is the only supplier for the extreme ultraviolet (EUV) technology-based lithography equipment.

By being part of the consortium, it is possible that Samsung would be able to reduce its Arm licensing and royalty fees. On the scale that Samsung works at, any small deductions could soon earn back its investments.

If you are wondering who might join Samsung in the consortium, The Korea Times reports on the thoughts of Objective Analysis semiconductor analyst, Jim Handy. Handy mentions a mix of fabless and intelligent system companies as being potential members of the consortium; companies such as Rambus, Cadence and Synopsys, for example.

This might be a more likely outcome of the Softbank disposal of its investments in Arm, due to the financial burden Nvidia would have to shoulder individually (about $41 billion) and the potential for regulatory approval issues.



HEXUS Forums :: 9 Comments

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A consortium sounds like a more plausible and less contentious option for sure.
https://www.bbc.co.uk/news/technology-53637463

The co-founder of the company described as the jewel in the crown of British tech has said it would be disastrous for it to be sold to a US computing firm that is reportedly negotiating a takeover.

It's the second time in four years that the future of Cambridge-based chip-designer ARM Holdings has been uncertain.

In 2016, Softbank ended up buying it. But the Japanese firm is now reportedly in advanced talks to sell it to Nvidia.

Hermann Hauser told the BBC he thought the UK government should intervene.

The tech entrepreneur - who spun off ARM from Acorn Computers in 1990 - says ministers should help make it an independent UK business again.
'Unsuitable owner'

ARM creates computer chip designs that others then customise to their own ends. It also develops instruction sets, which define how software controls processors.

Just about every modern mobile phone and smart home gadget is powered by a chip that relies on one or both of these innovations.

When Softbank bought the firm for £24bn soon after the referendum to leave the EU in 2016, it was hailed by the government as a vote of confidence in a post-Brexit Britain.

But Dr Hauser said at the time it was a sad day for him and for UK technology.

He explained that ARM's business model - in which all the big chip-makers license its technologies - made Nvidia an unsuitable owner.

“It's one of the fundamental assumptions of the ARM business model that it can sell to everybody,” he explained.

“The one saving grace about Softbank was that it wasn't a chip company, and retained ARM's neutrality.

”If it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to ARM."

While Dr Hauser voted against the Softbank deal in 2016, he says the Japanese firm kept its promises to retain Cambridge as the main focus of ARM's research and to boost employment there.

He has little faith in that remaining the case if Nvidia takes over.

Even the ARM co-founder said Nvidia would be a terrible owner,so yes a consortium would be a better choice. As he mentioned ARM has to stay neutral and be easily licensable,other as he said companies will look at other alternatives.
Just sell it to me. I've got a good few hundred quid in the bank and my credit card goes up to a grand or so.

I'll be neutral. I just won't sell to any company which has treated me like a turd as a consumer. That is however, a very long list.
A consortium would be a far better option than a single owner that has no licensing experience. Samsung/Qualcomm/Marvell/Apple?/Broadcom?/Amazon/Fujitsu? and other major ARM licensees would all stand to benefit from this model.

Allowing the sale of ARM outside of the UK or even the EU was a critical failure of the government.
I think UK government should do all that is in their power to bring back ARM to UK.

We are seeing the tech war going USA vs China, and it is ugly. For all other countries who do not have some unique but wanted tech (like ARM), it will be difficult and expensive in the future.

PS: I am not UK citizen, but I always loved Acorn and then ARM, and always saw them as the jewel of UK tech.