Korean Chipmakers Think ARM Price Too High

[Daniel Nenni]

Korea’s leading semiconductor companies have taken a step back regarding a possible joint acquisition of ARM, a global chip design company. As SoftBank chairman Masayoshi Son has demanded a price excessively higher than its actual value, ARM is losing its attractiveness as an acquisition target, experts say.

SK Hynix said in a public disclosure on Oct. 28 that it will not pursue a joint acquisition of ARM. The disclosure was in contrast with the company's previous announcement issued in March. At the time, it said, “We are continuously reviewing various strategic options, including a joint acquisition of ARM, to sharpen our business competitiveness and enhance our corporate value.".

The SoftBank chairman met with Samsung Electronics chairman Lee Jae-yong on Oct. 5 to discuss cooperation between ARM and Samsung. But reportedly, they discussed no specific details about the sale of ARM shares. At that time, ARM and SoftBank laid out various cooperation plans to Samsung Electronics. Most analysts say that Samsung has not been enthusiastic about acquiring ARM, so it did not make any concrete move to acquire a stake in it.

When SoftBank’s plan to sell ARM to Nvidia fell apart in February this year, Intel CEO Pat Gelsinger and Qualcomm CEO Cristiano Amon expressed their intention to pursue a joint acquisition of ARM. However, no deal was made as Son quoted a very high price for ARM, analysts say.

ARM’s enterprise value is not as high as it used to be. The current price of ARM is said to stand at over US$60 billion, an increase of at least US$20 billion from US$40 billion offered by Nvidia. However, ARM’s annual sales are only US$2.7 billion. Recently, open-source RISC-V technologies such as SiFive have emerged, threatening ARM’s competitiveness. Semiconductor industry insiders say ARM's enterprise value does not exceed US$50 billion.

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Korean Chipmakers Think ARM Price Too High

Korea’s leading semiconductor companies have taken a step back regarding a possible joint acquisition of ARM, a global chip design company. As SoftBank chairman Masayoshi Son has demanded a price excessively higher than its actual value, ARM is losing its attractiveness as an acquisition target, exp

www.businesskorea.co.kr

 

[blueone]

I remember years ago attending some meetings for UC Berkeley's Aspire project. RISC-V was just emerging. As soon as I saw RISC-V the first thing that came to mind was the likely weakening or even demise of the proprietary embedded core IP licensing business. (Arm, MIPS, Arc, etc.) That prediction is certainly is coming to pass, especially for start-ups, and perhaps even the big guys (as in networking and storage ASICs). I've been reading recently about RISC-V out of order technology, which is a prelude to datacenter versions. I think Arm is underestimating the threat of RISC-V to their business model. If I worked at Arm, I'd recommend selling sooner than later. The Nvidia deal was probably their best case scenario; too bad it didn't happen. I have a lot of respect for Arm technology.

 

[Daniel Nenni]

I worked for Virage Logic when they acquired ARC. When Synopsys bought Virage I did not think the ARC business would flourish. I was wrong and it still is to this day. I would not bet against the Synopsys IP group, they know how to make money.

We published a book on Arm in 2015: https://semiwiki.com/books/Mobile Unleashed - front to back.pdf

We sent a draft to Arm and Sir Robin Saxby did the foreword, that is how good it is. I was truly enamored with Arm back then but after the Softbank acquisition not so much. Arm is in a hole and they keep digging deeper. The Nvidia acquisition would have been disruptive but it failed. I was expecting an IPO but that is not looking good and it would not be disruptive. Something disruptive has to happen otherwise our next Arm book will be a "remember when".