Korean media analysis: Why is Samsung "indifferent" to the acquisition of Arm?

Nvidia recently announced that it will acquire Arm from SoftBank for $40 billion. If this acquisition is realized, it will become the largest deal in the history of semiconductor industry mergers and acquisitions. Nvidia has agreed to purchase all Arm shares held by SoftBank and its subsidiaries, and will seek approval from major countries.

Arm is a chip design company that accounts for more than 90% of the basic designs of the world's mobile application processors (APs). If Nvidia acquires Arm, it will become a semiconductor giant as big as Intel. In this regard, the Wall Street Journal said that this is not good news for competitors such as Samsung Electronics, because Nvidia can exert great power in the semiconductor industry in the future.

According to businesskorea, when Arm was put up for sale, some experts raised the possibility of Samsung Electronics competing for the acquisition, mainly because Nvidia could pose a threat to Samsung by acquiring Arm. However, Samsung Electronics is not very interested in acquiring Arm. Samsung is reportedly concerned about the conflict between Arm and Samsung's current business.

There is a strong feeling within Samsung that acquiring Arm will make it difficult for Samsung to achieve its "Semiconductor 2030" vision, which aims to make Samsung a top company in the system semiconductor field by 2030. "Samsung's foundry customers such as Qualcomm still suspect that Samsung may investigate their semiconductor structure." "If Samsung acquires Arm, it will lose many foundry customers."

In addition, the price of acquiring Arm is also a problem. In 2019, Arm's sales reached US$1.9 billion, less than 5% of Nvidia's acquisition price. Some analysts said that Samsung Electronics is in a different situation from Nvidia, which is a company specializing in GPUs and urgently needs AP-related technology. Samsung Electronics produces APs on its own and has reached a high level of technology.

Samsung Electronics explained that even if Nvidia changes Arm's neutral stance towards customers and raises the price of mobile AP licenses, it will not have a significant impact. A Samsung executive said, "Although the licensing cost of the basic design of mobile APs is not a large proportion of the production cost of APs, Arm's price of $40 billion is too high to satisfy both parties."