Qualcomm among queue of suitors chasing a stake in Arm

Chipmaker interested in forming a consortium for purchase – and so is SK hynix, Intel


Qualcomm has reiterated it would like a stake in Arm and help create a consortium that would keep the Brit chip designer neutral, or out of the hands of any single chip company at least.

The latest development in the Arm IPO saga comes from Qualcomm's chief executive, Cristiano Amon, who told the Financial Times that his company was interested in investing in Arm, and that Qualcomm could join forces with other chipmakers to buy Arm outright from owner SoftBank.

"It's a very important asset and it's an asset which is going to be essential to the development of our industry," Amon said.

Qualcomm could be key in this as the chipmaker is one of Arm's bigger licensees: its Arm-based Snapdragon chips power a great many smartphones and other mobile devices.

This makes Qualcomm just the latest of several companies that have expressed an interest in owning at least a stake in Arm. Earlier this year, Park Jung-ho, co-CEO of Korean chipmaker SK hynix, told a meeting of the company's shareholders that it was considering forming a consortium to buy Arm.

"We are reviewing possibly forming a consortium, together with strategic partners, to jointly acquire it," Park Jung-ho is reported to have said.

Intel CEO Pat Gelsinger also said at its Investor Day in San Francisco in February that he would be interested in participating in any consortium that emerged to take ownership of Arm.

Meanwhile, it was reported that Gelsinger met with Samsung boss Lee Jae-yong this week to discuss cooperation between the two companies. As Samsung has an interest in the Arm ecosystem – it manufactures its own Exynos Arm processor chips – could a discussion about the two firms investing in Arm have been on the cards at that meeting? This is purely speculative.

Qualcomm's Amon said almost a year ago that Qualcomm would be prepared to take a stake in Arm as part of a consortium of industry players, if owner SoftBank decided to float the company instead of selling it to Nvidia, which was the plan at the time.

Whether Amon had foresight or not, the deal under which Nvidia would have purchased Arm for an estimated $66 billion eventually fell through, with the two parties citing "significant regulatory challenges" as one of the reasons the sale was halted.

As The Register has detailed before, the potential sale to Nvidia came under unprecedented scrutiny, with various regulatory bodies around the globe taking an interest. This included not just the UK government's Competition and Markets Authority, but also the US Federal Trade Commission, the European Commission, and China's antitrust authorities.

One of the reasons behind all these concerns is that Arm is seen as an independent provider of processor technology – "the Switzerland of the chip industry" – that is not aligned with any single company.

This complicates any potential sale that might see Arm owned by an entity that already has a large stake in the markets that Arm technology is used in.

"It is impossible to sell it to any single global player because of its importance as an independent provider of chip designs," Andrew Buss, IDC's research director for European Enterprise Infrastructure, told us previously.

However, the prospect for any consortium of chipmakers that could take overall control of Arm might after all be thwarted by SoftBank itself: the investment conglomerate is planning to keep a controlling stake in Arm after the public offering rather than divesting itself of the entire share.

Arm disclosed earlier this month that its revenue for 2021 had grown 35 percent year-on-year to $2.7 billion. Despite this, the company was pursuing job cuts to reduce costs ahead of the public offering.

SoftBank has previously stated that it aims to complete the Arm IPO within the fiscal year ending March 31, 2023. The New York Stock Exchange is understood to be the preferred location to float rather than London.

According to reports, Arm is cutting one in 10 jobs in the UK organisation, equating to circa 340 to 350 jobs. It is understood to be expunging 1,000 staff globally. A senior source close to Arm told us they expect more layoffs at the HQ in Cambridge if the NYSE IPO goes ahead.

"If Arm lists on the Nasdaq or the Dow Jones there is a requirement to move the HQ to the USA; if it lists on the FTSE100 at its current valuation it would be the ninth biggest company listed. The rumor is Arm is too big for a London stock exchange listing." ®

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