SoftBank Considering Selling Chip Designer Arm: WSJ

SoftBank is reportedly considering the full or partial sale of Arm to bolster the firm’s cash reserves as part of a $41 billion USD debt reduction program.

A new report from the Wall Street Journal cites “people familiar with the matter” as saying that the review is still at an early stage, and that it isn’t known how much interest there might be in Arm, which designs the vast majority of computer processor chips used in mobile devices.

According to the report, SoftBank has long intended to return Arm to public markets at some stage. However, those plans could be accelerated as SoftBank is coming under pressure from the activist investor Elliott Management Corp., which has reportedly taken a $3 billion USD stake in Arm’s parent company and is agitating for changes following the poor performance of some of its investments.

SoftBank is best known for its Vision Fund, which is the world’s largest technology-focused venture capital fund, armed with more than $100 billion USD  in capital. But the fund has performed poorly following a series of questionable investments and in May reported an $18 billion USD loss. The Journal said those losses have undermined SoftBank’s plans to raise a second big investment vehicle.

Arm licenses designs to companies like Qualcomm but also licenses its chip instruction set — the collection of commands software can use to control it — to companies like Apple that design their own. Arm’s designs are also used as the basis for chips made by Samsung and Nvidia.

SoftBank purchased Arm in 2016 with the intent of bolstering its internet of things division.

Goldman Sachs is reportedly advising SoftBank on its review of financial options. It wasn’t immediately clear how much financial interest the company is generating, and a source told the Journal SoftBank could decide not to pursue any of those options.