Arm moves one step closer to its anticipated listing.
On August 9, international media reports indicated that Japan's SoftBank Group has finalized plans for its chip design subsidiary, Arm, to go public on the U.S. NASDAQ in September. Notable companies such as Apple and Samsung are set to become cornerstone investors in Arm. It's understood that SoftBank is aiming to sell minor stakes to Apple, Samsung, NVIDIA, and Intel. With Arm's projected market capitalization exceeding $60 billion at the time of its listing, this could be the largest IPO event worldwide in 2023.
Other media sources, referencing insiders, state that Amazon is currently in discussions with various tech firms about joining as cornerstone investors for Arm's public offering.
Being one of ARM's major clients, Amazon's cloud computing segment (AWS) prominently features chips based on ARM technology, such as the Graviton server chip. These chips are not only cost-effective but also powerful. Apart from Amazon, other tech giants including Intel and NVIDIA have been previously rumored to show interest in the ARM IPO.
Detailing the listing procedure, Arm, after submitting its IPO application earlier in April, is likely to formally apply to the U.S. Securities and Exchange Commission in August. Once it receives the green light from NASDAQ, Arm is expected to make its market debut in mid to late September.
Currently, SoftBank Group owns a 75% stake in Arm, with the remaining 25% held by SoftBank's Vision Fund. Post-IPO, the Vision Fund is anticipated to offload 10%-15% of its shares on the market. With a valuation pegged at $60 billion, Arm's worth has essentially doubled since SoftBank acquired it for 24 billion pounds back in 2016.
Established in 1990, Arm stands as the world's premier supplier of semiconductor IP (Intellectual Property). Over 90% of mobile chips globally are powered by Arm architecture, underscoring its significance, on par with operating systems. Heavyweights like Apple, Qualcomm, Huawei, and Samsung are all dependent on Arm. Moreover, in the expansive IoT market, Arm commands a leadership position. When compared to the Intel-driven X86 architecture, Arm offers a superior balance of performance to power consumption. It's worth noting that Arm was privatized by SoftBank for $31 billion in 2016, resulting in its delisting from NASDAQ.
The resurgence of Arm's IPO aspirations can be traced back to NVIDIA's unsuccessful bid to purchase the company.
In September 2020, SoftBank announced a $40 billion deal to sell Arm to NVIDIA. However, this proposed sale encountered resistance from regulators across various countries. By February 2022, both NVIDIA and SoftBank mutually declared the termination of this acquisition, citing the insurmountable regulatory challenges they faced. Concurrently, SoftBank revealed that Arm would embark on its journey to an independent public listing, aiming to wrap up the IPO before March 31, 2023.
Yet, SoftBank's IPO roadmaps encountered multiple delays, encompassing debates on the ideal listing venue. As a British chip design entity, the UK government championed Arm's listing on the London Stock Exchange. This past March, Arm's CEO, Rene Haas, conveyed that after extensive discussions with the UK government and its financial regulators, both SoftBank and Arm resolved to solely list in the U.S. in 2023, viewing it as the optimal move for all stakeholders.
However, Arm hasn't dismissed the potential of eventually listing on London's exchange. The company has expressed interest in a subsequent London IPO when the timing is deemed appropriate, though specific details remain under wraps.
At present, SoftBank's founder, Masayoshi Son, is fervently championing Arm's IPO. Son is convinced that with the rising demand for IoT and AI innovations, Arm is poised to tap into an expansive market, positioning itself at the cusp of a transformative growth phase. In 2022, Arm reported revenues amounting to $2.8 billion, with an impressive shipment tally of over 250 billion chips incorporating Arm technology. Additionally, SoftBank has doubled the roster of engineers at Arm.
