Nvidia got denied, will Intel get away with a piece of ARM?
Ever since Nvidia’s plan to acquire ARM failed, the Softbank fund has been aiming to monetise the company through an IPO instead, in which a portion of ARM’s stock would be sold not to a single acquiring party but through the mechanisms of open stock trading. It turns out this could have curious results, because it seems the initial public offering could end up with Intel, the main competitor, being one of the owners.
According to reports from Bloomberg and Reuters, Softbank has contacted major ARM clients and users of these processors to participate in an initial public offering (IPO) as anchor investors. During IPOs, companies tend to offer shares to large institutional investors before the actual trading commences, as this allows them to contractually secure the sale of a certain package at an agreed price, which can then serve as a kind of kickoff point for the actual open trading once the stock market opens.
According to Reuters, Google (or Alphabet) and Microsoft, as well as chipmakers using ARM architecture – Samsung and Apple – were among the parties contacted with an offer for a stake in ARM. And TSMC was also approached as the foundry where most of ARM’s clients then have their designed chips physically manufactured.
But the most interesting name among these anchor investor candidates is Intel. It too has been reached out to by ARM and could therefore take an ownership stake in ARM in this IPO, even though it is essentially the main competitor – at least in the general perception. It should be added that Intel is also interested in providing “foundry” services to manufacture ARM chips, in which case it would operate as a partner akin to TSMC’s role. Intel’s other divisions would still be competing with ARM processors, however.
It should be said, however, that this would not mean Intel buying ARM. If Intel alone were to acquire a significant share of ARM, it would probably be a cause for concern similar to the case with Nvidia. But in this case, Intel’s share would probably fall far short of a supermajority. We’re likely talking about shares closer to single digit percentages. It should be remembered that Softbank is not even going to sell 100% of the shares right now, but only a portion of them, probably less than a controlling majority. The initial goal is reportedly to raise about 8 to 10 billion dollars through the IPO.
So it wouldn’t be a case of Intel taking over and the adverse impact on the competitive environment might not actually be significant. Whether Intel’s stake would still attract scrutiny of some antitrust watchdogs, we don’t know yet.
On the other hand, if it wasn’t just Intel, but also some of the other companies of those mentioned at the beginning of this article that would take advantage of the offer, the result could be quite positive. The involvement of many industry players without any one having full control could provide ARM with that important neutrality and openness to all possible clients and users, which many called for and expected to suffer or even disappear completely in time were ARM to end up as a wholly owned subsidiary of Nvidia.
In any case, it is not yet clear whether these negotiations will succeed and whether Intel or the other companies mentioned will accept ARM’s offer to get a stake as the anchor investor(s). Negotiations are expected to run until August. So everything is far from final at the moment. All of the companies mentioned, including ARM, did not respond to reporters’ requests for comment on the matter or explicitly declined to comment. But it is unlikely that the Bloomberg and Reuters reports are not based on real evidence.
ARM’s IPO is expected to take place in the US stock market, where preparatory negotiations have been ongoing since April, and is expected to take place at some later time this year.
Sources: Bloomberg, Reuters, techPowerUp
English translation and edit by Jozef Dudáš
⠀
