Masayoshi Son's AI gamble: SoftBank (SFTBY.US) is reportedly plotting to acquire Marvell (MRVL.US) in order to create the largest semiconductor acquisition in history.

According to informed sources, SoftBank Group (SFTBY.US) explored the possibility of acquiring the American chip manufacturer Marvell Technology, Inc. (MRVL.US) earlier this year. If the deal is completed, it would be the largest acquisition in the history of the semiconductor industry. According to informed sources, the billionaire founder of this Japanese conglomerate, Masayoshi Son, has been intermittently studying Marvell for years, considering it a potential acquisition target. This is part of his hardware strategy to benefit from the artificial intelligence (AI) boom. Sources say that SoftBank had expressed interest in Marvell a few months ago, but the two parties were unable to reach an agreement on the terms of the deal. Sources said that SoftBank's intention to acquire Marvell is to merge it with its subsidiary, the British chip design company Arm (ARM.US). Some sources say that although Marvell and SoftBank are not currently engaged in active negotiations regarding a deal, the possibility of resuming the acquisition still exists. These sources mentioned that Masayoshi Son often evaluates dozens of potential transaction opportunities simultaneously, but in most cases, he does not take practical action. During the Asian trading session, Marvell's stock continued to rise on the night trading platform Blue Ocean. Since the beginning of the year, the company's stock has accumulated a 16% decline, with a current market value of about $80 billion. This performance is in contrast to companies like NVIDIA Corporation (NVDA.US), Broadcom Inc. (AVGO.US), and Arm, whose stocks have risen significantly this year. Arm's current market value is around $170 billion. Some sources also stated that Marvell may attract interest from other potential acquirers. Representatives from SoftBank, Marvell, and Arm all declined to comment. Data-driven business growth Under the leadership of CEO Matthew Murphy, Marvell primarily designs and develops semiconductor chips and related technologies for data centers - large server clusters that support cloud computing and AI operations. In the fiscal quarter ending on August 2nd, Marvell reported a record revenue of $2 billion. If the acquisition is successful, this would be the latest move in SoftBank's series of investments aimed at expanding its influence in AI infrastructure. In March of this year, the group agreed to acquire semiconductor design company Ampere Computing LLC, which manufactures specialized processors for data center equipment. SoftBank acquired Arm in 2016 and plans to list it in 2023, currently holding nearly 90% of its shares. It has been reported that Masayoshi Son and Arm's CEO Rene Haas have been developing their own AI chip, expected to be unveiled next year. Currently, NVIDIA Corporation has shown the immense wealth potential brought by the frenzied construction of AI data centers, with its stock price soaring by 1300% over the past five years, making it the first company globally to reach a market value of $5 trillion. Chip manufacturers like Marvell and Arm are trying to capitalize on the demand from customers like OpenAI and Microsoft Corporation. Tech companies are planning to invest over $1 trillion in AI chips and other infrastructure over the next several years. In recent years, optimism about the prospects of Marvell's custom chip business has driven its stock price up - its customers include Amazon.com, Inc. (AMZN.US) AWS and Microsoft Corporation. However, in March of this year, the company's stock experienced its largest single-day decline in over twenty years due to revenue forecasts failing to meet the market's highest expectations. Additionally, as a major competitor to Marvell in the field of custom AI chips, Broadcom Inc. has secured new customers such as OpenAI. Some analysts are concerned about the predictability of Marvell's future business due to uncertainties in customer demand, leading TD Cowen to downgrade the company's rating to "hold" in September. Reshaping the chip market competition landscape Analysts say that if Marvell were to merge with Arm, it would create a more competitive player in the chip market. Marvell's core strength lies in integrating chip design elements - such as the technology provided by Arm - and turning them into final design solutions, which are then delivered to fabrication plants like Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) for production. However, acquiring Marvell faces multiple obstacles, with the potential deal price possibly approaching $100 billion. The US government has been striving to develop the domestic semiconductor industry, so even with Masayoshi Son's close relationship with Donald Trump, there is uncertainty as to whether the US government would approve a Japanese company's acquisition of this American chip manufacturer. Furthermore, the merger of Arm and Marvell could face antitrust scrutiny. In 2020, regulatory agencies in the US, Europe, and China forced NVIDIA Corporation to abandon its plans to acquire Arm. In 2018, Qualcomm (QCOM.US) also terminated its proposed acquisition of NXP Semiconductors NV (NXPI.US) because it was not approved by Chinese antitrust regulators. Additionally, some sources revealed that Arm and Marvell have not reached a consensus on the integration of the management team post-acquisition. Haas is 63 years old, while Murphy is just over 50 years old. Nevertheless, SoftBank's strategy in this field is not limited to pure acquisition deals. In January of this year, SoftBank, alongside OpenAI and Oracle Corporation (ORCL.US), announced a $500 billion "Stargate" plan to build data centers in the US. Despite Son's commitment to invest $100 billion "immediately," the progress of the plan has been slower than expected, partly due to disagreements among the parties regarding the location of data centers.