Arm was acquired by SoftBank in 2016 for $32 billion and expects to return to public trading to compete with other chip designers and manufacturers.
British semiconductor and software design company Arm Holdings Limited announced on Monday that it had publicly filed a Form F-1 with the United States Securities and Exchange Commission (SEC) relating to a proposed Initial Public Offering (IPO) of American depositary shares (ADS). The SoftBank-backed company intends to list on NASDAQ under the ticker symbol ARM once the proposal is approved. Meanwhile, the listing price and number of shares have not yet been determined. As a result, the exact figures on IPO valuation cannot be determined now.
According to the announcement, Raine Securities LLC will act as the financial advisor whilst Barclays, Goldman Sachs, JPMorgan, and Mizuho will be acting as joint book-running managers for the proposed Arm’s IPO.
Arm Holdings’ Market Outlook before the Planned IPO
The move by Arm’s management to go public via the United States instead of the United Kingdom’s London Stock Exchange was a huge blow amid slow IPOs in the past year. The company is one of the most important futuristic businesses as it plays a vital role in the development of artificial internet (AI) among other technologies. Moreover, Arm builds energy-efficient processor designs and software platforms for tech companies like Apple Inc (NASDAQ: AAPL) and Samsung.
Notably, the company announced that it has enabled the manufacturing of over 250 billion chips facilitated by close collaboration with more than 1k technology partners. The recent AI boom that saw Nvidia Corporation (NASDAQ: NVDA) shares rally more than 220 percent YTD has significantly influenced the Arm’s IPO game plan.
Founded in 1995, the company has been fine-tuning its chip designs to fit in with the growing technology around the world. As a result, the company reported about $524 million in net income on revenue of approximately $2.68 during the fiscal year 2023 that ended in March. Nonetheless, the company’s revenue was down approximately 4.6 percent YoY during the second quarter after announcing 2022’s revenue of about $2.7 billion.
During the fiscal year 2023, Arm highlighted that its chip designs were incorporated in more than 30 billion semiconductor products shipped during the year. Worth noting that the company takes a small fee for every shipped semiconductor chip that is manufactured using its design. However, the company highlighted that it faces competition from x86, the instruction set used in Intel and AMD processors, and also the RISC-V, which is an open-source instruction set backed by several big tech companies.
Meanwhile, the company highlighted that its three largest customers accounted for about 44 percent of its generated revenues. Additionally, the company noted that Qualcomm accounts for about 11 percent of its revenue despite the litigation over licensing violations.