SK hynix says Arm stake acquisition 'not underway'

South Korean memory chip maker SK hynix said it is not pursuing a plan to acquire a minority stake in the United Kingdom-based semiconductor intellectual property firm Arm, a filing showed Monday.

"(SK hynix) has put various strategic options on the table to strengthen our competitive edge and enhance shareholder value, but we hereby notify that there is no ongoing process for consortium-based acquisition of Arm as of now," read the firm's recent filing with the Financial Supervisory Service.

SK hynix declined to comment further on how the development of the stake purchase deal had unfolded before the filing.

The filing, seen as an apparent retreat from the prospective deal, comes six months after SK hynix hinted at the purchase of a minority stake in Arm, a SoftBank-backed chip designer that is responsible for over 90 percent of mobile chip intellectual property. Earlier in April, SK hynix said in a filing that the company "has been reviewing strategic options, including a joint stake investment in Arm," adding nothing has yet to be confirmed regarding the deal.

In March, SK hynix Vice Chairman Park Jung-ho told reporters in a briefing after the shareholder meeting that it was "considering co-investing in Arm with other companies,” given that "the (global semiconductor) ecosystem will not allow a single entity to take full advantage of the benefit from the acquisition.” This prompted separate filings in March and April stating that no decisions have been made regarding the Arm stake investment.

A month before the briefing, the US-based graphic processor giant Nvidia and SoftBank terminated the deal terms in February due to antitrust concerns and regulatory roadblocks.

Following the deal’s collapse, Intel and Qualcomm have openly expressed an interest this year in joining a prospective consortium to buy the stake in Arm, given the role it plays in the global computing industry.

The cash-strapped Arm has been looking for ways to raise new capital, with an initial public offering by next year being a primary option. Arm is now jointly owned by SoftBank and its flagship investment vehicle SoftBank VisionFund.

Arm had been forced to cut down its staff as its parent had recorded an all-time-high quarterly loss of $23 billion during the April-June period.

In the latest saga, heads of Samsung Electronics, a crosstown chip rival of SK hynix, came together with representatives of SoftBank and Arm in Seoul earlier in October to explore further strategic collaborations, raising speculations that SoftBank might consider cashing in on its Arm stake through a deal with Samsung. The talks, however, yielded no public announcements regarding the future of Arm.

Meanwhile, SK hynix is taking heat from the US’ chip-related export curbs on China, less than a year after its acquisition of Intel's memory operations in the US and China dedicated to NAND flash products and solid-state drives, including assets in Dalian, China.

While SK hynix announced that it had been granted a one-year waiver from the US authorities, SK hynix Chief Marketing Officer Noh Jong-won told an earnings conference that the US’ framework is "inevitably painful" to the company, as it runs operations in China.

On the same day, SK hynix announced that its third-quarter operating profit fell 60 percent from the previous year to 1.66 trillion won ($1.17 billion), and that it plans to cut capital spending on facilities by half beginning in 2023.

(consnow@heraldcorp.com)