SK hynix Considers Consortium for ARM Acquisition

SK hynix: discussing group acquisition of Arm

SK Hynix does not intend to repeat the mistake of Nvidia buying ARM alone, and is seriously considering forming a consortium with strategic partners. It is unclear which companies could be included in the consortium.

SK Hynix vice-chairman and chief executive Park Jung-ho said at its most recent annual shareholder meeting that the company was "reviewing a possible consortium with strategic partners to jointly acquire ARM. The chief executive expressed his interest in a company's ability to acquire ARM. Doubts of a successful ARM acquisition. "I want to buy ARM, if not all," the SK Hynix CEO continued. "It doesn't necessarily have to buy most of the stock to take control of the company. "

If the acquisition of Arm alliance is established, Intel intends to join

As early as February of this year, Intel CEO said that if a consortium intends to launch an acquisition of Arm, the company intends to participate. On February 17, Intel CEO Pat Gelsinger expressed his willingness to participate in the acquisition of Arm at an event, provided that a consortium is prepared to acquire Arm, the company will consider participating.

Gelsinger pointed out that there were discussions in the industry about forming a consortium long before Nvidia acquired Arm from SoftBank.

Nvidia valued the Arm acquisition at as much as $80 billion, but the deal failed earlier in February. SoftBank cited regulatory hurdles as the main reason for the failed acquisition and is seeking to push Arm to go public.

"So, if there is a consortium, we may be willing to participate in it in some way." Gelsinger said that Intel is very happy to see Arm can IPO or be acquired by a consortium, "Although we are not a big user of Arm, we do Use Arm. As our foundry business incorporates this technology, we will use more Arm products in the future,” he said.

How "difficult to sell" is Arm?

As we all know, ARM UK is the world's leading provider of semiconductor intellectual property (IP). More than 95% of smartphones and tablets worldwide use the ARM architecture. ARM has designed a large number of RISC processors, related technologies and software with high cost performance and low energy consumption. In 2014, the annual global shipment based on ARM technology was 12 billion, and there are 60 billion chips based on ARM technology since its birth. The technology is characterized by high performance, low cost and low energy consumption. It has a dominant position in the processor fields of smart machines, tablet computers, embedded control, and multimedia digital.

In recent years, due to the sluggish market economy and the epidemic blockade measures in early 2020, among the nearly 80 companies that SoftBank has invested in in recent years, 15 have (as of July 15, 2020) ended in bankruptcy. The heavy debt has forced SoftBank to "slim down" its debt by selling assets.

In June 2020, SoftBank announced the sale of 198.3 million shares of T-Mobile, the third-largest telecommunications company in the United States, with a total value of about $21 billion.

At that time, some industry players analyzed that if SoftBank wanted to sell Arm, there were certain restrictions on finding a "buyer". Because the semiconductor industry has rarely seen super large mergers and acquisitions since 2014 to 2016, "If it is sold, there is almost no possibility that the buyer will be Chinese-funded. At present, the United States cannot agree, and (CFIUS) will intervene. Arm, the UK will also intervene."

In September 2020, SoftBank planned to sell Arm to Nvidia, a deal that fell through in February.

SK hynix: At the thinking stage, no decision has been made

Some analysts believe that SK Hynix is targeting Arm in order to strengthen its foundry and system semiconductor business advantages. 

In October 2020, SK Hynix bought Intel's NAND memory and storage business for $9 billion. On December 30 of the same year, after taking over Intel's NAND business in the United States, SK Hynix established an independent subsidiary in the United States, Solidigm.

Regarding when to start the acquisition plan, SK Hynix said that it is currently in the early stage of discussing its participation in the acquisition of Arm, and there is no decision yet.