British chip designer Arm, owned by Japanese behemoth Softbank, has officially filed for its highly-anticipated initial public offering (IPO) on the Nasdaq, setting the stage for what is likely to be the year’s largest IPO so far. This development marks Arm’s return to the public markets after seven years – in 2016, it had been acquired by SoftBank for a total of $32 billion – and something that is expected to infuse life into an otherwise-lacklustre IPO sector in recent times.
The UK-based chipmaker is set to trade on the Nasdaq under the ticker “ARM,” even as it goes public in the US. This comes nearly five months after it announced that it had filed paperwork for an IPO with regulators in the US.
The IPO is set to be a noteworthy one – it comes after SoftBank’s efforts to sell Arm to chipmaker Nvidia fell through over antitrust concerns last year. The British firm clocked an annual drop in its revenue for the fiscal year ending in March – pocketing a total of $2.68 billion – while posting a net income of $524 million for the same period. Still, it comes at a time when the demand for semiconductors has weakened.
A successful IPO would reinforce the company’s position as a global leader in chip design and innovation, while paving the way for other tech startups to go public, especially hardware startups in the semiconductor and AI domains. Furthermore, a successful IPO would inject significant capital into Arm’s R&D efforts, while providing some gains to Softbank after its otherwise dismal tech-investment performance.
For now, it is unknown how much stock SoftBank seeks to sell via the IPO, though Reuters reports that SoftBank aims to sell about 10% of Arm’s shares in the IPO, while valuing the chip designer at $60-70 billion. Arm’s filing notes that it will remain a “controlled company” per Nasdaq’s definition. The IPO will be led by Barclays Plc, Goldman Sachs, JPMorgan Chase & Co., and Mizuho Financial Group, and will have 24 other underwriters.
Founded in Cambridge, England, Arm’s journey from a niche computing company known as Acorn Computers to a global technology powerhouse has been a noteworthy one. For those who need a refresher, it was established as Advanced RISC Machines in 1990 through a collaboration between Acorn, Apple, and U.S. chipmaker VLSI Technology. While Arm does not manufacture chips itself, its designs serve as the bedrock upon which numerous other companies build their chips.
Today, Arm’s chip designs can be found in the likes of Apple’ iPhones and most Android devices, and its revenue stems from licensing its intellectual property for chip architectures, allowing other companies to construct systems around these designs according to their own requirements. These designs encompass everything from overall architecture to programming language instructions, positioning Arm as a well-established name in the tech world. The company has already broadened its horizons to encompass diverse sectors, including the burgeoning domain of connected cars and the thriving realm of cloud computing.