Softbank gives way
Sale of chip designer Arm failed
2/8/2022 1:53 p.m
The billion-dollar deal to take over the chip designer Arm by the industry giant Nvidia fails due to resistance from competitors and competition watchdogs. However, the Japanese Arm owner Softbank is not only under pressure because of the failed deal.
After a long struggle with the competition authorities, the 80 billion dollar sale of the chip designer Arm to the US company Nvidia finally fell through. This puts the Japanese technology investor and Arm owner Softbank under pressure: The new Arm boss Rene Haas is now supposed to list the British group on the stock exchange before March 2023 – if possible in the USA – and thus ensure liquidity, as the companies have announced.
However, Softbank is not only under pressure because of the failed deal. In addition, the company is suffering from its weakening investment portfolio with companies such as the office broker WeWork, Alibaba and the Berlin online used car dealer Auto1, which are suffering from the global sell-off of technology stocks. The US antitrust authority FTC finally put an end to the Arm/Nvidia deal. She filed a lawsuit against the project in December, pointing to a weakening of competition in the operation of data centers and chips for self-driving cars if the two groups merged. There were also concerns from competition authorities in Great Britain and the European Union.
Softbank finds itself in the midst of a blizzard
Only recently the sale of the Munich chip supplier Siltronic to the larger competitor GlobalWafers from Taiwan failed after a 14-month review. Because competition authorities are now keeping a close eye on corporations when it comes to large takeovers. Softbank acquired the British provider in 2016 for $32 billion. Arm licenses its processors to customers such as Qualcomm, Apple, Samsung Electronics and Nvidia, who want to keep their 20-year license despite the failed deal. In addition, the Americans will pay a fine of 1.25 billion dollars.
Almost every smartphone and millions of other devices have licensed Arm processors. Nvidia is best known for its graphics cards, but components are now increasingly being used in other fields such as artificial intelligence.
In the past quarter, Softbank suffered from a lower value of its holdings. From October to December, profits therefore fell to the equivalent of 220 million euros from 8.87 billion euros in the same period last year. “We are in the middle of a blizzard and the storm is not over yet, it’s getting stronger,” said Softbank founder and CEO Masayoshi Son.
Softbank continues to invest briskly despite headwinds
In the past quarter, the stock market valuations of WeWork, driving service provider Grab and Auto1 fell below the issue price. In addition, increasing regulation in the People’s Republic of Alibaba and other technology stocks in which Softbank is involved. Despite the headwinds, Softbank continues to invest heavily through its Vision Funds 1 and 2. The smaller Vision Fund 2 alone has now invested $43.1 billion in more than 200 startups – including the Berlin solar company Enpal and fintech Vivid, the logistics service provider Forto and the e-scooter company Tier.
For a long time, Marcelo Claure, who was responsible for the operative business, was considered the most likely successor to the 64-year-old Son. However, Claure is leaving the company – apparently after a dispute over his payment. It is now unclear whether he will move into the supervisory board of Deutsche Telekom. In the Bonn group, the Japanese are the largest single shareholder after the federal government, and Claure should have a position on the supervisory board.