SK Hynix considers ARM acquisition through new consortium formed with strategic partners
SoftBank originally planned an ARM IPO a few years ago, but then Nvidia interfered and came with an offer SoftBank could not refuse. Unfortunately for Team Green, the US$64 billion deal could not be finalized and SoftBank is again ready to initialize an IPO for ARM by 2023. Unless some other companies come up with a good deal. Apparently, SK Hynix is now considering acquiring ARM, but the South Korean company is well aware that it cannot pull this off alone and is discussing this with strategic partners in order to form a special consortium.
SK Hynix vice chairman and CEO Park Jung-ho stated at the latest annual shareholder meeting that the company is “reviewing possibly forming a consortium, together with strategic partners, to jointly acquire ARM. The CEO expressed his doubts that a single company could manage to buy ARM. "I want to buy ARM, if not entirely," continued the SK Hynix CEO. "It doesn't have to be buying a majority of its shares to be able to control the company."
Many companies depend on ARMs technology currently, and Nvidia’s attempt to buy ARM alone was met with fears that Team Green would eventually control how ARM's IPs get licensed. It is still unclear what strategic partners are considered for the consortium, but at least SK Square and SK Telecom seem plausible, since these companies are also headed by Jung-ho. Some U.S. companies could also join in order to provide geo-political balance.
The sudden interest in acquiring ARM expressed by SK Hynix is also related to the company’s expansion into the foundry business, which should be more profitable than the 3D NAND and DRAM business. Just last week, SK Hynix received approval from local authorities to acquire Key Foundry. Furthermore, Jung-ho intends to “build an R&D center in Silicon Valley and use it as a key base to enhance partnership with big tech companies and improve competitiveness."
As noted in a Financial Times report quoted by Tom's Hardware, ARM has its own internal problems. The Chinese branch of ARM has gone rogue for almost 2 years now, and ARM itself is looking to transfer the ARM China stake to SoftBank so it can speed up the IPO. On the other hand, ARM China also intends to go public in a few years, and if the branch manages to initiate the IPO, SoftBank and ARM could easily regain control by buying the majority of shares.