Gaonchips rally on market talk of Samsung's investment in ARM

Shares in South Korea’s semiconductor chip design house Gaonchips Co. extended their rally for a second day on Friday on growing market talk that its key customer Samsung Electronics Co. might take a stake in its other official partner ARM Ltd., a British semiconductor design company.

The Kosdaq-listed stock has soared 40% in the two-day rally as of Friday's market close, following a Bloomberg report on Wednesday that SoftBank Group Chairman Masayoshi Son was quoted by his spokesperson as saying: “I want to discuss a strategic alliance for ARM with Samsung.”

Samsung and ARM have been in collaboration for the chip foundry business, based on ARM’s intellectual property rights.

Samsung’s possible stake purchase of ARM would beef up the world’s top memory chipmaker’s foundry, or contract manufacturing capacity, for which they may have to increase orders to their chip design partner Gaonchips.

SoftBank and its Vision Fund own the entirety of ARM, after they purchased it for $31.4 billion in 2016. Last year, it tried to sell the British semiconductor firm to US rival Nvidia Corp. for $40 billion. But the deal broke out due to the US antitrust body’s opposition.

Gaonchips is an official design partner of both Samsung’s foundry division and ARM.

In relation to the Bloomberg report, Samsung Electronics Co. Vice Chairman Jay Y. Lee told reporters on the same day that he will meet with SoftBank's Son next month. During the planned meeting, Lee expects Son to make a sort of proposal about ARM.

Industry watchers said Samsung is expected to seek a minority stake in ARM to avoid regulatory challenges, including the antitrust issue.

Gaonchips specializes in designing chips for autonomous driving and artificial intelligence sectors. It was established in 2012 by an ex-Samsung employee Jung Kyu-dong. 

It makes the integrated circuits designed by fabless companies such as Qualcomm Inc. into marketable products to be manufactured by foundry firms such as Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Company (TSMC).

Its shares closed up 20% at 32,150 won on Friday, after climbing to their historic high of 39,500 won touched in late June. It made s trading debut on the junior Kosdaq market in May of this year.

Write to Min-Kyung Shin at radio@hankyung.com
Yeonhee Kim edited this article