Arm Returns to Public Market, Initiates IPO on Nasdaq

ARM, the chip IP designer owned by SoftBank, has filed for an initial public offering (IPO) on the Nasdaq exchange, signaling the end of a long-running ownership saga. The IPO details, including share prices and listing dates, have yet to be determined. However, Arm has secured the ARM ticker symbol for the new offering.

Since early 2022, when nVidia’s acquisition of Arm was abandoned due to regulatory pressure, the company has been in a state of uncertainty. SoftBank, instead of pursuing the acquisition, decided to take Arm public. This decision was seen as a more challenging and less profitable endeavor. Over the past 18 months, SoftBank has been preparing for the IPO.

SoftBank initially acquired Arm in 2016 for approximately $32 billion as part of its growth strategy. However, after facing setbacks with other investments like WeWork, SoftBank began exploring options to strengthen its balance sheets. NVIDIA emerged as a potential buyer, offering $40 billion for Arm. Unfortunately, regulators deemed Arm too critical to be held by a single tech company, leading to the collapse of the deal.

The failure of the NVIDIA acquisition left Arm in a state of uncertainty. While SoftBank is likely to find investors on the open market, there are doubts about whether they can sell any stake in Arm at a profit. SoftBank’s IPO filing indicates that they will retain voting control over Arm, suggesting they are not completely divesting from the company. Nonetheless, SoftBank aims to turn a profit on Arm, and the timing of the IPO is crucial in achieving that goal.

Arm has not disclosed the number of shares or their price for the IPO yet. However, Reuters reports that SoftBank recently re-acquired the outstanding 25% stake in Arm held by its Vision Fund unit. This deal valued Arm at $64 billion, aligning with reports that SoftBank is targeting an IPO valuation between $60 billion and $70 billion. SoftBank is reportedly courting initial investors such as NVIDIA, Intel, and other tech companies, potentially forming a quasi-consortium of tech firms with partial ownership of Arm.

A successful IPO would bring stability to Arm’s engineering side, although investment pressures will persist. As a public company, Arm will face investor demands for further growth and increased revenues. However, being able to develop products without the uncertainty of being sold to another company will allow Arm to focus on its priorities. Arm will need to find ways to drive growth while navigating challenges posed by alternative processor designs like RISC-V MCUs and their impact on royalty rates.

Background Information

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About ARM: ARM, originally known as Acorn RISC Machine, is a British semiconductor and software design company that specializes in creating energy-efficient microprocessors, system-on-chip (SoC) designs, and related technologies. Founded in 1990, ARM has become a prominent player in the global semiconductor industry and is widely recognized for its contributions to mobile computing, embedded systems, and Internet of Things (IoT) devices. ARM's microprocessor designs are based on the Reduced Instruction Set Computing (RISC) architecture, which prioritizes simplicity and efficiency in instruction execution. This approach has enabled ARM to produce highly efficient and power-saving processors that are used in a vast array of devices, ranging from smartphones and tablets to IoT devices, smart TVs, and more. The company does not manufacture its own chips but licenses its processor designs and intellectual property to a wide range of manufacturers, including Qualcomm, Apple, Samsung, and NVIDIA, who then integrate ARM's technology into their own SoCs. This licensing model has contributed to ARM's widespread adoption and influence across various industries.

  

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About Intel: Intel Corporation, a global technology leader, is renowned for its semiconductor innovations that power computing and communication devices worldwide. As a pioneer in microprocessor technology, Intel has left an indelible mark on the evolution of computing with its processors that drive everything from PCs to data centers and beyond. With a history of groundbreaking advancements, Intel's relentless pursuit of innovation continues to shape the digital landscape, offering solutions that empower businesses and individuals to achieve new levels of productivity and connectivity.

  

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About nVidia: NVIDIA has firmly established itself as a leader in the realm of client computing, continuously pushing the boundaries of innovation in graphics and AI technologies. With a deep commitment to enhancing user experiences, NVIDIA's client computing business focuses on delivering cutting-edge solutions that power everything from gaming and creative workloads to enterprise applications. Renowned for its GeForce graphics cards, the company has redefined high-performance gaming, setting industry standards for realistic visuals, fluid frame rates, and immersive experiences. Complementing its gaming prowess, NVIDIA's Quadro and NVIDIA RTX graphics cards cater to professionals in design, content creation, and scientific fields, enabling real-time ray tracing and AI-driven workflows that elevate productivity and creativity to unprecedented heights. By seamlessly integrating graphics, AI, and software, NVIDIA continues to shape the landscape of client computing, fostering innovation and immersive interactions in a rapidly evolving digital world.