SoftBank to maintain stake in Arm after partial sale

TOKYO — SoftBank Group plans to maintain a stake in U.K. chip designer Arm, which has formed the core of its strategic investments in artificial …

TOKYO — SoftBank Group plans to maintain a stake in U.K. chip designer Arm, which has formed the core of its strategic investments in artificial intelligence, even if it sells a partial interest to Nvidia or through an initial public offering, Nikkei has leaned.

SoftBank was already considering an IPO of Arm in the next few years when it was approached by Nvidia last month, according to sources. A sale would not be part of SoftBank’s current $41 billion asset monetization program, which it has already made progress by selling shares in U.S. carrier T-Mobile and other companies.

A source familiar with the matter said “there is no change to the IPO plan,” but that SoftBank has not ruled out a bilateral deal and is weighing both options.

Intent on holding on to a partial stake, SoftBank is negotiating the terms and schemes with Nvidia, sources said. One possibility is for SoftBank to take a stake in Nvidia after it bought Arm.

Another scenario is Nvidia and Arm merging through a share swap and SoftBank becoming a major shareholder in the combined company.

Nvidia’s offer could value Arm at a price higher than the 24 billion pounds ($31 billion) when SoftBank purchased the company in 2016.

SoftBank’s founder and chairman, Masayoshi Son, has shown confidence about the growth potential of Arm. In SoftBank’s annual shareholders meeting in late June, he said “shipments [of semiconductors designed by Arm] are growing exponentially.” He has repeatedly explained his plans to list Arm in a few years, signaling that SoftBank would maintain a stake after recouping its investment through an IPO.

An alliance between Arm and Nvidia may create synergies by enhancing development capability. While Arm handles the upstream process of semiconductor design, Nvidia focuses on the downstream process.

Arm currently has a market share of about 5% for chips used in data centers. It may be able to develop new fields in collaboration with Nvidia.