SK Hynix considers joint acquisition of UK chip designer Arm

South Korea's SK Hynix Inc. is considering forming a consortium with other strategic investors to buy Arm Ltd., a British semiconductor design company, SK Hynix Chief Executive Park Jung-ho said on Wednesday.

"No single company can afford to buy Arm. We're considering acquiring it in a consortium with (other) strategic investors," Park told reporters on the sidelines of SK Hynix's annual general meeting (AGM), when asked about any progress in its possible bid for Arm.  

This marked the second time Park has mentioned Arm. In an answer to shareholders' questions about SK Group's interest in Arm during SK Square Co.'s AGM on Monday, he said: "We want to buy Arm as well ... We don't have to target a controlling stake."

Playing down the CEO's remarks, however, an SK Hynix official said the company is in the early stages of considering its bid for Arm and nothing has been decided yet. 

Headquartered in Cambridge, England, Arm is a subsidiary of Japan's SoftBank Group. Global semiconductor companies such as Samsung Electronics Co. and Qualcomm Inc. rely on Arm's chip architecture.

It controls 90% of the chip design market for mobile application processors, the brain of smartphones. 

Back in 2020, SoftBank signed a $40 billion agreement to sell Arm to the US-based Nvidia Corp. But the deal is at risk of collapsing after the US Federal Trade Commission in December 2021 filed an antitrust complaint to block the transaction.

In the complaint, the US antitrust body said that the proposed deal would allow the combined firm to unfairly undermine Nvidia’s rivals.

APPROVAL OF DOMESTIC FOUNDRY ACQUISITION

Park's remarks come just as the Korea Fair Trade Commission on Wednesday cleared SK Hynix's 576-billion-won ($480 million) acquisition of Key Foundry Co., saying their combination would not hamper competition in their product markets.

In October 2021, SK Hynix agreed to take over the entire stake in Key Foundry from Magnus PEF to beef up its foundry and system chip businesses. 

The deal will double the company’s total foundry capacity to about 200,000 wafers.

Located in Cheongju, North Chungcheong Province, Key Foundry runs only 8-inch fabrication lines, which produce semiconductors such as power management integrated circuits (PMICs), display driver ICs (DDICs) and microcontroller units (MCUs).

SK Hynix outsources the production of its core and state-of-the-art chips to TSMC Ltd. and other third-party foundry companies, while entrusting CMOS image sensors and other products in their maturity stage to SK Hynix System IC.

Key Foundry is a spin-off of the foundry division of Magnachip Semiconductor, which itself was hived off from Hynix Semiconductor, the predecessor of SK Hynix.

Write to Hyung-Suk Song at click@hankyung.com
Yeonhee Kim edited this article.