According to TEAMtalk the Magpies are targeting a loan move for the player, given their lack of transfer funds this summer, but would be required to take on the player's high wages by Arsenal - understood to be in excess of £100k-a-week.
Arsenal had originally wanted a permanent deal for Welbeck to try and recoup some funds, but understand with limited interest in the player that a loan away may be the only option.
Everton had been linked with an interest in the former Manchester United ace, with a transfer fee of £15m being suggested, but nothing substantial has materialised.
Newcastle boss Rafa Benitez is hoping the Magpies can steal in and tempt the player away on loan as a result.
The Spaniard believes St. James' Park can be a desirable destination for both player and club.
Arsenal are not said to see Newcastle as a rival, unlike Everton who they see as being potential challengers for a top-six finish. The club would be more willing to do business with a club they do not see as a potential threat in the coming season.
Benitez also wants striker Salomon Rondon from relegated West Brom this summer, having made the Venezuelan a top priority to beef up his attacking options.
I can't see Danny Welbeck joining unless Arsenal are chipping in for his wages. Plus it'll be hard to explain to the old lads at games that one of his core strengths is 'memes'.— NUFCThreatLevel (@NUFCThreatLevel) July 23, 2018
However, the 58-year-old would be keen to add Welbeck to his striking ranks too, which have been identified as a weakness of the team.
Welbeck would certainly offer a higher quality attacking option, and potentially a more reliable source of goals which Newcastle need, but it remains a significant gamble on whether the player can maintain fitness and avoid injuries for a long enough spell to be effective for his loan club.