SK Hynix Emerges As A Surprise Arm Suitor But With A Different Strategy Than NVIDIA
When NVIDIA called of its Arm deal
last month due to mounting regulatory hurdles, it was expected the British chip designer would head towards an Initial Public Offering (IPO) spearheaded by its parent firm Softbank. And not just any IPO, but the "biggest IPO ever in semiconductor history," Softbank founder Masayoshi Son said at the time. Turns out an acquisition might still be on the table.
NVIDIA is not making another run at Arm
(it already had to pay a $1.25 billion breakup fee), but SK Hynix is considering it. However, SK Hynix isn't thinking about going at it alone, and is instead mulling a joint purchase with other companies involved.
"We are reviewing possibly forming a consortium, together with strategic partners, to jointly acquire it," Park Jung-ho, vice chairman and CEO of SK Hynix, stated during the company's annual shareholders meeting. "I don't believe Arm is a company that could be bought by one company."
Certainly it would be challenging for a single company to acquire Arm, as NVIDIA found out. It would take tens of billions of dollars to get a deal hammered out, and companies with that kind of capital are likely to run into regulatory roadblocks here and abroad. The concern, as was raised by Qualcomm
during NVIDIA's bid, is that a rival tech company would become the gatekeeper of Arm's IP and could therefore prevent other companies from using its technologies.
It's a valid concern, given the broad reach of Arm's IP. Unless you've gone off the grid and live in a shanty completely detached from technology, you probably own multiple hardware devices based on Arm. Arm's IP is practically everywhere—smartphones, tablets, TVs, wireless routers, a vast sea of IoT devices, and so forth.
SK Hynix's strategy to form a consortium increases the odds that a deal could get done. It's not clear what companies it might partner with, though it brings up some intriguing possibilities. For example, NVIDIA could be a part of the consortium, as could Intel, which recently sold its SSD business
and Dalian fab to SK Hynix. Neither of those of names were mentioned, just to be clear.
One thing we can say for sure is that SK Hynix wants to buy Arm
in some fashion. Park said as much, noting, "I want to buy Arm, if not entirely. It doesn't have to be buying a majority of its shares to be able to control the company."