August 12, 2020
SoftBank, which spent $32 billion to buy ARM Holdings in 2016, is now actively considering ARM’s sale to Nvidia, according to SoftBank founder and chief executive Masayoshi Son. The company has also invested in Slack, WeWork, and Uber, which have experienced high-profile problems. The U.K.-based ARM Holdings, originally founded by Acorn, Apple and VLSI, designs low-power RISC chips that have become ubiquitous for mobile phones. Last month, SoftBank reportedly hired Goldman Sachs to explore options for a sale or going public.
Engadget reports that ARM Holdings “licenses its chips to any company willing to pay, which includes Qualcomm, MediaTek, Samsung and Apple.” The company’s designs can be “edited by the licensees to their own custom specifications, depending on the application they’re being designed for,” including low power computers as well as smartphones and tablets, a sector it dominates.
Apple uses ARM-based designs “for its custom smartphone chips, which will form the basis of its push for Apple Silicon in its computers.”
Since the sale of ARM to Nvidia has not yet been inked, Son “also told investors at an event that ARM could go public once again,” speeding up an original plan to go public in 2023. Engadget notes that, “it would be hard to see companies turning their nose up at the chance to own a piece of ARM, which while small, creates a key component for billions of devices worldwide.”
ARM co-founder Dr. Hermann Hauser, who criticized the sale to SoftBank, called a potential sale to Nvidia a “disaster” because it would be a “partisan owner” unlike the company’s history of licensing designs to all customers. Hauser has “asked the British government to intervene, in the hope of restoring some national pride after allowing the U.K.’s one true tech giant to fall into foreign ownership.”
CNBC reports that Son said he is studying which option — sale or relisting as a public company — would be the best solution. He also mentioned the option of selling a part of the company, saying the deal could be a “mixture of cash and stock.” Currently SoftBank Group owns 75 percent of ARM and SoftBank Vision Fund owns 25 percent. It notes that, “SoftBank posted a $12 billion quarterly profit Tuesday after valuations in SoftBank Vision Fund portfolio companies like Slack and Uber increased significantly.”
New SoftBank Fund Buys Apple, Amazon Stock. Talks on Arm Holdings Confirmed, Barron’s, 8/11/20