ARM aims for a $52bn valuation in IPO

ARM aims for a $52bn valuation in IPO

UK-based semiconductor designer, ARM, owned by SoftBank, is setting its sights on a $52.3bn valuation as it prepares for a blockbuster initial public offering (IPO) in the US. The tech powerhouse is offering 95.5 million American depositary shares, aiming to raise up to $4.87bn. Among the lead underwriters are Barclays, JPMorgan, and Mizuho. Notably, Arm, whose designs power over 99% of the world’s smartphones, has drawn in major clients as investors, including tech heavyweights such as Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel, and Samsung Electronics.

From humble beginnings to tech titan

ARM’s journey to its present status as a tech titan has been intriguing. The Cambridge-based company traces its roots back to a struggling British firm named Acorn. In a twist of fate, Acorn was transformed into ARM Holdings, a successful chip design company, thanks to a pivotal investment by Apple and Italian computer company, Olivetti. The investment was intended to create a new microprocessor for the Newton, Apple’s first attempt at a tablet computer which was eventually discontinued. ARM’s original IPO in 1998 coincided with a low point in Apple’s history, but the proceeds from Apple selling its stake in ARM helped the company survive, thus marking ARM as a significant player in Apple’s success story.

Today, ARM’s designs are at the core of chips that power iPhones, iPods, iPads, and the Apple TV. Its impressive client roster includes the world’s biggest tech giants, and it generates a significant share of its revenue through royalty fees based on either the average selling price of the customer’s ARM-based chip or a fixed fee per chip. This business model has ensured ARM’s steady growth, even in the face of a global slump in smartphone shipments.

The IPO and its significance

The ARM IPO is expected to be a significant milestone for ARM and its parent company, SoftBank. Having previously acquired ARM in 2016 for $32bn, SoftBank is anticipated to retain 90.6% ownership of ARM’s ordinary shares once the IPO concludes. Notably, there is the possibility of SoftBank’s proposed price range for the IPO increasing in response to strong investor demand.

ARM’s return to the public markets is expected to stimulate the IPO market globally and encourage other startups to move forward with their offerings. The success of ARM’s IPO could signal the return of investor appetite for high-growth technology companies.

ARM’s chip designs have played a transformative role in the chip industry, powering a wide range of electronic devices that we rely on daily. From smartphones and tablets to smart home devices, wearables, and even high-performance computing systems, ARM has established itself as a key player in driving innovation across multiple sectors.

With ARM’s energy-efficient and versatile designs, manufacturers can create products that offer optimal performance, longer battery life, and seamless connectivity. These designs have not only revolutionized the mobile industry but also enabled advancements in emerging technologies such as the Internet of Things (IoT), artificial intelligence (AI), and autonomous vehicles.

Overall, ARM’s IPO represents a pivotal moment not only for the company but also for the chip industry as a whole.