Passive Sun Zhengyi: Can Samsung help solve ARM's urgent needs?

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SoftBank has been under pressure to cash in on ARM after its flagship tech investment vehicle, the Vision Fund, suffered a record loss last fiscal year.To raise money, SoftBank sold its remaining stake in U.S. ride-hailing giant Uber in the second quarter and reduced its stake in Alibaba Group Holding Ltd.

Meanwhile, global tech stocks have been hit hard in recent months, hitting SoftBank's plans to list ARM in 2022.Masayoshi Son has previously stated that he is thinking about what to do with ARM "almost every day" and is "very positive".

However, Son's quest for a strategic partnership with Samsung is not without challenges.If ARM strikes a deal with a particular chip company, it could face resistance from other customers and ultimately threaten its commitment to chips for mobile phonesDesign control.

First visit to South Korea after the pandemic

Son announced Wednesday that he plans to visit South Korea in October for talks with Samsung."I'm looking forward to visiting South Korea for the first time in three years, and I want to talk to Samsung about its strategic alliance with ARM," he said in a statement.

Masayoshi Son, who has been working in Tokyo since the start of the COVID-19 pandemic, visited Samsung in person, showing his enthusiasm for potential collaborations.

Samsung Group's de facto leader, Samsung Vice Chairman Lee Jae-yong, said Wednesday that Son's visit to Seoul "may bring upSome kind of proposal", "but I'm not sure".

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Masayoshi Son sees ARM as the "core" of SoftBank Group, a chip design company whose products are basically blueprints that chip companies use to finalize designs.ARM's products are popular because they are energy efficient.Over 90% of the world's smartphone processors are based on ARM's intellectual property.

A source familiar with the chip industry said ARM is the "sole leader" in mobile phone chip design.

Why Samsung?

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

Samsung held 125 trillion won ($89 billion) in cash at the end of June.The company is believed to be exploring acquisitions in the chip space to diversify its semiconductor product line beyond memory chips and smartphone processors.

Nomura's head of Asia technology research, CW Chung, said Samsung had bought all of ARM's shares on its own, given antitrust concerns that had thwarted Nvidia's earlier takeover attempt.The odds are low."It is more likely that Samsung may seek to acquire part of ARM," he said.Another possibility, he also said, is for SoftBank to first sell a partial 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 players are expected to closely monitor the fate of ARM's proposed partnership with Samsung.

The challenge remains strong

However, there are barriers to ARM working too closely with another semiconductor company.Arm's strengthening of ties with a particular customer could spark resistance from other customers, who fear the partnership puts them at a disadvantage.

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

ARM's unrivaled status 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 could challenge Arm's dominance in the field.Several startups are already offering blueprints based on RISC-V architectures.A wrong move by ARM could scare off customers and squeeze its market share.

In addition, other companies have expressed interest in taking a stake in ARM.Qualcomm CEO Cristiano Amon, a major ARM customer, said earlier this year that the company was interested in investing in ARM.In addition, analysts and the media have speculated that the semiconductor industry may form a consortium to acquire ARM.

Masayoshi Son said, "I hope people expect growth in our core business."He may face a tough balancing act as he lays out his next steps for ARM, whether it's an IPO or a partnership with Samsung.(Author/Xiao Yu)

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