What just happened? British chip design company Arm has filed for a multi-billion-dollar initial public offering at New York's Nasdaq stock exchange. According to industry watchers, the company is seeking to raise between $8 billion and $10 billion from what's being described as the year's biggest IPO. The move follows the company's confidential filing for a U.S. stock market listing earlier this year.
Arm hasn't released a public statement on its filing, so it's not immediately clear what its expectations are from the IPO. As of now, there's no projected share price, but reports suggest that the company could be valued in excess of $60 billion following the listing. As per the filing, Arm's technology is essential for handling AI applications entirely or in combination with a co-processor, such as a GPU or an NPU. The company also identified x86 and RISC-V as its main competitors.
Owned by Japanese investment holding company SoftBank, Arm is one of the most notable names in the global chip industry, with its designs being used to manufacture mobile SoCs by leading companies like Qualcomm, Apple, Amazon, Samsung, Nvidia, MediaTek, Unisoc, and others. As a result, almost all modern mobile devices, including most smartphones and tablets, are powered by processors based on its designs.
According to a Wall Street Journal report from last week, SoftBank recently bought a 25 percent stake in Arm from its own Vision Find unit at a valuation of $64 billion, suggesting it is bullish on the company's stock price post-IPO. However, Bernstein analysts recently put a more subdued $40 billion valuation on the company, although, as pointed out by TechCrunch, it was based on the limited details available about the company's finances.
If earlier reports are anything to go by, SoftBank has every right to be bullish, as Arm is said to be in talks with around 10 companies about investing in its IPO. Those include some of the marque names in the tech industry, including Amazon, Apple, Samsung, Intel and Nvidia, among others. Amazon, in particular, is reportedly seeking to be an anchor investor by buying a major chunk of the British chipmaker at a fixed price before the listing.
In recent years, Arm has been a target for acquisition by larger tech companies because of its near monopoly in the mobile SoC market. A few years ago, Arm's board agreed to sell itself to Nvidia for $40 billion, but the deal was blocked by the U.S. and European antitrust regulators last year. Now that the IPO is in the works, the company will have to navigate the regulatory hurdles with caution to ensure that things go swimmingly this time around.