SoftBank Looking To Sell Or Take Chip Designer Arm Holdings Public: WSJ

SoftBank Group Corp (OTC: SFTBY) is reportedly considering a full or partial sale of its British chipmaker subsidiary Arm Holdings, according to a Wall Street Journal report Monday.

What Happened

The Journal’s sources said SoftBank’s discussion is still at an early stage, and the level of interest financial or industry constituents might have in Arm is as yet unknown. 

SoftBank is facing pressure from stakeholder and activist investor Elliott Management to raise cash, and this may prompt the Japanese group to take Arm public.

Why It Matters

The Japanese conglomerate had purchased Arm Holdings in a deal in 2016, which was termed the largest ever by the group at that time. 

Arm’s chips are used in most of the world’s smartphones, and the acquisition of the company was termed as a “paradigm shift” by SoftBank CEO Masayoshi Son, reported the Journal. 

The Cambridge-based company’s chips will also be used in future lines of Mac computers, as Apple Inc (NASDAQ: AAPL) transitions away from Intel Corporation’s (NASDAQ: INTC) x86 architecture, reported Engadget. 

Last Week, Arm said it planned to transfer two of its Internet of Things businesses to SoftBank to focus on semiconductors, noted Engadget.

SoftBank’s startup investments have failed to turn profit lately, putting the company’s Vision Fund in the crosshairs of Elliott Management, which is demanding increased oversight.

Losses at the Vision Fund, which invested in companies such as WeWork and Uber Technologies Inc. (NYSE: UBER) amounted to $16.5 billion in the financial year ended March 2020.

The Vision Fund holds a 25% stake in Arm and has been considering handing over the stake to SoftBank, reported the Journal.

Price Action

On Monday, SoftBank OTC shares closed 0.95% higher at $29.82.