Samsung is considering acquiring a small stake in ARM, between 3% and 5%. This is reported by an industry source. This is part of a plan to establish a consortium of chip companies that will buy ARM and not an individual company.
Samsung’s goal is to reduce royalty payments for the production of chipsets based on the ARM platform – the Cortex and Mali GPU processors. The Korean giant uses these in ARM’s Exynos chipsets.
Even if a company skips Cortex in favor of its own processor design (e.g. M-Series cores), it still has to pay royalties for using the ARM command set. This no longer applies to Samsung as it closes its custom processor division.
And not just Samsung, Apple is also transferring its Macs to ARM-based self-development chipsets, so you’ll have to ensure its ability to acquire licenses for the foreseeable future. This is why Apple has been one of the companies rumored to be acquiring ARM.
Some reports have claimed that Nvidia has been in “advanced talks” to buy a full stake in ARM from Softbank, but many are wondering whether the graphics processor maker will be able to afford the $ 41 billion that Softbank is asking for according to the same source.
Second and most importantly, there is a fear that such a deal may not even be approved. Processors licensed by ARM are everywhere, from smartphones to washing machines, and handing them over to a unit company raises concerns about the establishment of a monopoly. Softbank does not manufacture chipsets, but Apple, Nvidia and Samsung all compete in the field to some degree, so they may be blocked if they try to buy 100% of ARM.
This is probably part of the reason Samsung will not try to take over the company but will share it with a consortium. This will ensure that regulators do not have anti-competitive behavior.
Such a strategy has worked well for Samsung since it acquired a 3% stake in ASML back in 2012 (for $ 642 million). The Dutch company is currently the only one in the world to manufacture lithographic equipment essential for Extreme UltraViolet (EUV) chips.
Since then, Samsung has enjoyed a good relationship with the company even though it sold half of its holding in 2016 and it now holds 1.5%. Samsung accounted for 29% of ASML sales in the first quarter of 2020, as it expanded its EUV capability.
According to one of ARM’s co – founders, Herman Hauser, allowing Nvidia to buy ARM would be a disaster, as it would undermine ARM’s neutrality and ability to address the needs of different companies and vendors. Apparently, market concerns mostly from companies like Apple and Qualcomm Opilo Intel have led to reports that Softbank will still retain partial ownership in ARM.
“This is one of the basic assumptions of ARM’s business model – that it can sell to everyone,” Hauser told the BBC.
“The kindness that saved Softbank was that it was not a chip company, and maintained ARM neutrality. If it becomes part of Nvidia, most licensees are competitors of Nvidia, and they will of course look for an alternative to ARM. ”
Dr. Hauser opposed the sale of ARM to Softbank in 2016, noting that he does not believe Nvidia will continue to run research and development at Cambridge if it buys the company. He proposes to the UK government to raise funds to return ARM to British ownership.