What just happened? British chip design firm Arm Holdings this week priced its IPO at $51 per share, valuing the company at around $54.5 billion. Arm is raising $4.87 billion from what is being described as the year's largest IPO, with the stock expected to be listed on the Nasdaq today and trade under the ticker symbol 'ARM.' The IPO is expected to close on September 18, 2023.
According to Axios, the company is listing at least 95.5 million American depositary receipts on the Nasdaq, while Japanese investment holding firm SoftBank will control the remaining 90 percent of the outstanding shares. The IPO is believed to be a massive success, with the issue said to have been oversubscribed to a factor of 10 in the lead-up to the listing.
Arm filed for its IPO last month after much speculation about the company's plans to go public. In its filing, the firm claimed that its technology is essential for processing AI applications, either in isolation or in combination with a co-processor, such as a GPU or an NPU. With AI becoming an increasingly popular buzzword in the tech industry, Arm's IPO was always expected to be a massive hit, despite the recent slump in the semiconductor market due to stagnating smartphone sales.
SoftBank bought Arm in 2016 for a reported £24 billion (around $30 billion), but the company only owned 75 percent of the British chip-designer until recently, while its subsidiary unit SoftBank Vision Fund owned the rest. Earlier this year, the Japanese technology investor bought out the remaining 25 percent stake for a reported $16 billion, valuing Arm at $64 billion.
Arm is one of the biggest names in the chip industry, thanks to its energy-efficient designs that are used in all varieties of mobile gadgets, including smartphones, tablets, laptops, and even desktop computers. Almost all the biggest names in tech either make their own chips based on Arm's designs or use third-party SoCs underpinned by Arm technology. Arm's partners include the virtual who's who of the tech industry, such as Qualcomm, Apple, Amazon, Samsung, Nvidia, MediaTek, Unisoc, and others.
Arm's IPO comes a few years after its board agreed to sell the company to U.S. chip giant Nvidia for $40 billion, but the deal was eventually scuttled by the U.S. and European antitrust regulators. Announcing the termination of the Arm-Nvidia merger talks last year, Masayoshi Son, the Chairman and CEO of SoftBank Group, said that the company will take the setback in its stride and start preparing to take Arm public. He, however, offered no indication that the IPO would come this soon.