Potential Samsung-Arm Merger Deal Could Face Antitrust Hurdles

British chip designer Arm is the speak of the city — once more — in South Korea, because it emerged as Samsung Electronics’ potential merger and acquisition goal.Samsung Electronics Vice Chairman Lee Jae-yong stated that SoftBank Group CEO Masayoshi Son will go to South Korea subsequent month to speak a few potential partnership or a deal.

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“When he visits, he may need some provide (concerning an Arm deal). However I’m not certain,” he advised reporters upon arrival at Gimpo Worldwide Airport from his two-week enterprise journey overseas, with out elaborating additional.

His final cease was Britain, the place the semiconductor and software program design firm is predicated, stoking years-old speculations that deep-pocket Samsung is perhaps excited by shopping for Arm, to consolidate its place as a number one chipmaker and beef up its competitiveness additional within the trade of rising strategic significance, experiences Yonhap information company. However he didn’t meet Arm executives throughout his go to to Britain, Lee stated.

“I need to focus on a strategic alliance for Arm with Samsung,” Son was quoted as saying by Bloomberg on Wednesday night time, confirming Son’s deliberate go to to Seoul for the primary time in three years. Samsung has been eying a brand new M&A deal for years. On the CES 2022, Samsung Electronics Vice Chairman and co-CEO Han Jong-hee stated the corporate was extensively reviewing M&A alternatives in numerous industries.

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“We’re transferring sooner than you would possibly assume. We’re open to each risk, and I believe we will ship excellent news in the end,” he stated at the moment.

The final main M&A deal of Samsung, the world’s largest reminiscence chip and smartphone vendor, got here in 2016, when it acquired U.S.-based Harman Worldwide Industries, specializing in linked automobile options, for US$8 billion. Since then, speculations have been flying round, with Samsung executives reaffirming a deal is imminent. However no information has been heard on that entrance.

In September 2020, Nvidia, one of many world’s largest chip corporations by market capitalization, and Softbank entered a mega $40 billion deal to mix Nvidia’s main AI computing capabilities with the huge ecosystem of Arm’s central processing unit. A deal would make the 2 corporations “advance computing from the cloud, smartphones, PCs, self-driving automobiles and robotics, to edge IoT, and develop AI computing to each nook of the globe,” Nvidia stated in a press launch.

In February, nonetheless, what would have been the most important chip deal collapsed due to “important regulatory challenges.” Competitors regulators within the U.S., EU, China and Britain had expressed considerations that the mix of the chip trade’s two main gamers might pose a serious menace to honest competitors.

Following the deal’s collapse, SoftBank, which acquired Arm in 2016, stated it’s going to, as an alternative, take the chip firm public by the tip of subsequent March. Even when Samsung is excited by a possible deal, it will nonetheless face the identical regulatory hurdle. And Samsung shouldn’t be the one chipmaker drawn to Arm’s expertise and IP licensing portfolio.

In March, Park Jung-ho, vice chairman and CEO of SK hynix Inc., the world’s second-largest reminiscence chip maker, stated the corporate was “reviewing a risk of forming a consortium, along with strategic companions, to collectively purchase” Arm.

“I don’t imagine Arm is an organization that could possibly be purchased by one firm,” Park stated. “I need to purchase Arm, if not solely. It doesn’t must be shopping for a majority of its shares to have the ability to management the corporate,” he stated.

Qualcomm CEO Cristiano Amon additionally stated in Could his firm was contemplating making a consortium with rivals to purchase a stake in Arm to be able to keep Arm’s neutrality, given its significance within the international chip ecosystem.

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The opportunity of Samsung buying Arm solely by itself is “slim,” stated Greg Roh, head of expertise analysis at HMC Funding & Securities.

“Samsung is just like Nvidia. It makes Arm-based system-on-chip (SoC) like Exynos. So the identical antitrust rule will probably be probably utilized to Samsung,” he stated. “However it’s nonetheless a very good factor for Samsung to place many choices on the desk, because it repeatedly stated it was actively searching for offers.”

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