Masayoshi Son, the founder and CEO of Japan’s SoftBank Group Corp. in Seoul, is in talks with a number of South Korean companies, including tech giant Samsung Electronics Co., about possible alliances in the company’s sale of British chip design company Arm Holdings Ltd.
On Monday, Jay Y. Lee, vice chairman of Samsung Electronics, is anticipated to meet with Son and talk about a variety of cooperative partnership concerns, according to multiple sources in the business sector.
Despite no formal confirmation from Samsung Electronics, the sources stated that the two might have already met. Lee and Son are believed to be close friends who frequently talk business over the phone during the pandemic. The two leaders’ most recent official encounter took place in 2019. But they continued to communicate.
With regard to Arm, SoftBank has formally said that it will talk about a “strategic alliance” with Samsung Electronics. During the meeting, Lee and Son are anticipated to talk mostly about the Arm affair.
After a proposal to sell Nvidia a 75% stake in the British chip manufacturer fell through due to regulatory issues, Son is reportedly enlisting strategic partners, including Samsung Electronics, for a pre-IPO scheme over Arm.
Arm performs the function of an architect wherein it provides the blueprint for chipmakers like Samsung Electronics, Apple Inc., and Qualcomm Technologies Inc., who use it to model their products on the architecture.
Arm’s main revenue stream comes from the licensing fees it charges customers. When partners get the intellectual property from the company, the partners pay set upfront license costs as well as variable royalties for each chip that is shipped that is based on the Arm architecture.
According to Arm, its annual overall revenue increased 35% year over year to $2.7 billion. Particularly, its royalty revenues increased 20% to a record $1.54 billion and its licensing revenues increased by a staggering 61% to $1.13 billion.
Samsung Electronics would probably purchase a stake in the pre-IPO equity sale because it cannot pursue the controlling position in Arm by itself due to monopolistic difficulties. Samsung Electronics could create a technical alliance with Arm through an equity investment.
Other topics Lee and Son might talk about include a potential merger and Samsung Electronics buying out one of the businesses in which SoftBank has invested through two of its Vision Funds. The two business giants might also talk about how to start Vision Fund 3.