SoftBank once considered acquiring Marvell to merge it with ARM to create a chip giant

SoftBank Group explored a potential acquisition of American chip manufacturer Marvell Technology earlier this year, aiming to merge it with its chip design company ARM to create a semiconductor giant in the artificial intelligence race.

On November 6, according to Bloomberg citing informed sources, SoftBank expressed acquisition intentions to Marvell months ago, but the two sides failed to reach an agreement on terms. Currently, both parties are not engaged in active negotiations.

Following the news, Marvell's stock price rose by 13% during the Asian trading session on the alternative trading platform Blue Ocean. So far this year, the company's stock price has fallen by 18%, with a market capitalization of approximately $80 billion. In contrast, the stock prices of NVIDIA, Broadcom, and ARM have all risen significantly this year.

(Marvell Technology has fallen over 18% this year)

Masayoshi Son's AI Landscape

Driven by the boom in AI data center construction, the AI chip market has immense potential, providing strong momentum for SoftBank's layout.

According to media reports citing informed sources, Masayoshi Son has been intermittently studying the feasibility of Marvell as a potential acquisition target for years.

However, even if SoftBank resumes negotiations, the deal still faces significant obstacles.

First, the transaction price could approach $100 billion, which would be a massive investment.

Second, the deal will face strict regulatory scrutiny. Although Masayoshi Son has a close relationship with former U.S. President Trump, the U.S. government is committed to developing its domestic semiconductor industry, and it remains unclear whether it would approve a Japanese company acquiring a key American chip manufacturer.

Additionally, antitrust review is also a huge challenge. Previously, regulators in the U.S., Europe, and China forced NVIDIA to abandon its acquisition of ARM in 2020.

Finally, media reports citing informed sources revealed that ARM and Marvell have also failed to reach an agreement on how to integrate their management teams. ARM's CEO Rene Haas is 63 years old, while Marvell's CEO Matthew Murphy is just over 50.

Marvell's Opportunities and Challenges

Marvell was once highly sought after in the market due to the prospects of its custom chip business, which serves clients including Amazon's cloud division and Microsoft.

Led by CEO Matthew Murphy, Marvell focuses on designing and developing semiconductor chips and related technologies for data centers, reporting a record revenue of $2 billion for the quarter ending August 2.

However, its performance has not been smooth sailing. In March of this year, Marvell's stock price experienced its worst single-day drop in over twenty years after the company's revenue forecast failed to meet the highest expectations At the same time, its main competitor in the custom AI chip field, Broadcom, has successfully won new clients such as OpenAI. Some analysts have expressed concerns about Marvell's future business predictability.

In September of this year, due to customer uncertainty, TD Cowen downgraded its rating to "Hold." With a market capitalization of about $80 billion, ARM's market capitalization has reached approximately $170 billion