Samsung cautiously eyes pre-IPO investment in Arm

Samsung is taking a conservative approach to an equity purchase in Arm due to its perceived overvaluation and regulatory risks. Koreajoongangdaily reports that the company is approaching the prospect of a pre-IPO investment in the British chip designer with careful consideration.

The South Korean tech giant is wary of potential risks and uncertainties associated with this investment opportunity. Since Arm preps for its initial public offering (IPO), the approach of Samsung reflects a cautious stance to ensure a well-informed decision.

“We are evaluating the issue, but no decision has been made yet,” an executive at Samsung Electronics said.

Arm has been a difficult proposition because its designs for application processors are so widely used, and it is a risk for it to be monopolized, especially by a company that competes with Arm’s clients. Arm is seeking to raise up to $10 billion through the blockbuster listing.

Winning big institutional investors before the listing is critical for Arm to rally the stock and support a higher valuation. The highly-anticipated listing comes as Samsung is unloading its key securities assets in an effort to secure cash amid dwindling profit due to the market downturn in the chip industry.

Earlier, Samsung sold more than half of its shares in ASML, raising about 3 trillion won ($2.2 billion). The 3 trillion won secured from the selloff is expected to be invested in facilities in contract chip manufacturing lines in Pyeongtaek and Taylor, Texas.