Samsung chief's comments viewed as intent to acquire British chip design company

The Korea Times

The Korea Times

Business

Sat, December 9, 2023 | 05:02

Tech

Samsung chief's comments viewed as intent to acquire British chip design company

Posted : 2022-09-22 16:44

Updated : 2022-09-23 15:33

Lee Jae-yong, vice chairman of Samsung Electronics, responds to reporters at the Seoul Gimpo Business Aviation Center, Wednesday. Yonhap

Chip expert says monopoly issue won't be a big problem

By Baek Byung-yeul

Samsung Electronics Vice Chairman Lee Jae-yong showed his intention to acquire British chip architecture design company Arm from Japan's SoftBank as the Samsung Group leader made public a plan to meet SoftBank CEO Masayoshi Son in Seoul next month. Considering Samsung's secretive nature, industry analysts said Thursday that the Samsung leader's remarks come as a surprise and signify a strong will to acquire Arm.

The U.K.-based chip design firm is currently up for sale as U.S. graphic chip giant Nvidia failed to gain approval from the fair trade bodies of countries deeply involved in the chip industry, even though it reached a deal to purchase a 100-percent stake in Arm from SoftBank for $40 billion in October 2020.

On Wednesday, the Samsung chief was asked when he arrived at the Seoul Gimpo Business Aviation Center whether there was a meeting to discuss the acquisition of Arm during his two-week-long business trip to Europe and Latin America. He answered, "We didn't meet, but SoftBank Chairman Son Jeong-ui (known as Masayoshi Son in Japan) will come to Seoul next month. I think he probably will make a proposal at that time."

It remains unclear whether Samsung will form a consortium with other companies to jointly acquire Arm to avoid monopoly concerns, because the U.K. chip design company is a leader in mobile chip architecture design.

However, Jim Handy, a renowned chip analyst and general director at Silicon Valley-based semiconductor market research company Objective Analysis, said the monopoly or antitrust issue will not be a big problem for Samsung, because the Korean tech company is not regarded as a processor manufacturer and will not be severely affected by the Herfindahl-Hirschman Index (HHI), a measure of market concentration that is used to determine market competitiveness.

"One part of the reason that Nvidia could not buy Arm is that it would have put too much power in the hands of one company. The antitrust laws in the U.S. to prevent monopolies very clearly state the conditions that the U.S. government finds unacceptable. One is market concentration, which is measured by the HHI. I believe that the HHI for Nvidia + Arm would have been too high. Samsung would not have this problem, since Samsung is not a processor manufacturer," he said.

"Of course, as you say, many of Arm's licensees and competitors, as well as Nvidia's competitors, would have been upset by an Nvidia acquisition, and they probably attended the hearings and presented their objections to the acquisition. I don't think that there would be as much noise during a Samsung-Arm hearing, since Samsung is not a processor company. I believe that it would be easier for Samsung to buy Arm than Nvidia," the analyst added.

Lee Jae-yong, left, vice chairman of Samsung Electronics, and Masayoshi Son, right, chairman and CEO of SoftBank, arrive at the Korea Furniture Museum in Seoul to attend a meeting, July 4, 2019. Yonhap

If Samsung succeeds in acquiring Arm, the world's No.1 memory chip maker will be able to create a significant synergy effect with its non-memory business. Samsung has invested a lot of money in the non-memory sector recently, saying it will also focus on industries that produce chips by taking orders from chip design companies or produce non-memory chips such as display chips and automotive chips.

Established in 1990, Arm generates profits by licensing its intellectual property related to mobile chip architecture design to other companies such as Apple, Qualcomm and Samsung.

Arm's parent company SoftBank is known to be interested in selling the British company, because the Japanese tech giant is strapped for cash as its Vision Fund suffered its biggest-ever loss. In August, the company posted a record quarterly loss of around 3.2 trillion yen ($21.9 billion).

Regarding Samsung's possible acquisition of Arm, a Samsung Electronics spokesman said, "We have nothing to say about this issue."

baekby@koreatimes.co.kr