Semiconductor M&A Heating Up Since IPEF Launch [New Economic Security Landscape]

⑤ Korea-US-Japan Semiconductor Alliance... Igniting M&A to Address Weaknesses

[Asia Economy reporters Park Sun-mi and Jung Hyun-jin] As countries aiming to develop semiconductors into a strategic industry strengthen their alliances, mergers and acquisitions (M&A) in the semiconductor industry are expected to accelerate.

On the 7th, the semiconductor industry is placing weight on the possibility that M&A activities complementing each country's semiconductor weaknesses will become active as a semiconductor alliance atmosphere forms following the launch of the U.S.-led Indo-Pacific Economic Framework (IPEF). Among the currently available assets, the most hotly watched is ARM, a semiconductor design company (fabless) headquartered in the UK. ARM, whose major shareholder is Japan's SoftBank, holds many core technologies for designing application processor (AP) semiconductors developed and sold by Samsung Electronics, Apple, Qualcomm, and others.

Following Intel, Qualcomm, and SK Hynix publicly expressing interest in acquiring ARM, Samsung, which needs M&A to expand its system semiconductor business, has also sparked speculation about acquisition review possibilities as Vice Chairman Lee Jae-yong began a business trip to Europe on the same day.

Industry insiders believe that ARM's valuation is astronomical and that regulatory authorities may strongly oppose a single company's acquisition, increasing the likelihood of acquisition through a consortium of companies crossing national borders. Since ARM's technology is used by several global companies such as Apple, Samsung Electronics, and Amazon, if acquired by a specific company, the technology could be used in a way that favors only that company, which also raises the possibility of a consortium.

[Image source=Yonhap News]

Qualcomm CEO Cristiano Amon said in a foreign media interview on the 30th of last month (local time), "Qualcomm is a party interested in investing in ARM shares," adding, "ARM is a very important asset and essential to the development of our semiconductor industry." CEO Amon added, "If the consortium size to invest in ARM shares grows sufficiently large, we cannot rule out the possibility of fully acquiring ARM by joining forces with other chip manufacturers." SK Hynix, which is hardly involved in the system semiconductor business, also revealed in March that "ARM is not a company that can be acquired by a single company," and "We are considering acquiring it as a consortium with strategic investors," according to Vice Chairman Park Jung-ho.

Since both ARM's major shareholders and companies interested in acquisition are all within IPEF participating countries, this aligns with the broader framework of strengthening the Korea-U.S.-Japan semiconductor alliance, creating an atmosphere that makes alliances and mergers easier. For Korea, strengthening strategic partnerships through ARM share participation would provide the power to complement the semiconductor design sector, which has been considered a weakness.

Amid ongoing U.S.-led semiconductor M&A moves to curb China, attention is also focused on the effects of semiconductor M&A involving Korea, the U.S., and Japan. The UK government recently initiated a national security assessment related to the acquisition contract of Newport Wafer Fab, the UK's largest microchip factory, by Chinese company Wingtech Technology through its Dutch subsidiary Nexperia. The U.S. government also conducted an investigation by the Committee on Foreign Investment in the United States (CFIUS) last year when Chinese private equity firm Wise Road Capital attempted to acquire MagnaChip Semiconductor, ultimately blocking the acquisition. At that time, the U.S. government warned of 'national security risks.'

An industry official said, "The formation of the Korea-U.S.-Japan semiconductor alliance and moves to curb China's semiconductor rise can serve as an opportunity for our companies to complement semiconductor weaknesses through M&A," adding, "Although the consortium composition and share participation scale are still in the early review stage, the atmosphere of semiconductor alliances has emerged since the launch of IPEF, improving the conditions."

This content was produced with the assistance of AI translation services.