SoftBank’s Chip Designer Arm Eyes $70B Valuation in Upcoming IPO

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by Chimamanda U. Martha · 3 min read
SoftBank’s Chip Designer Arm Eyes $70B Valuation in Upcoming IPO
Rene Haas, CEO at Arm. Photo: Fortune Brainstorm TECH / Flickr

The move to go public comes amid growing interest in artificial intelligence chips, reflected in the increased market mood towards technologies linked to generative AI.

British chip designer Arm Ltd, a subsidiary of the SoftBank Group Corp, is preparing to conduct an initial public offering (IPO) in the coming months. According to a Bloomberg report citing people familiar with the matter, the semiconductor maker targets a valuation between $60 billion to $70 billion for the IPO. The IPO event is anticipated to kick off as early as September, followed by share pricing in the subsequent week. This move sets the stage for what could be the largest initial public offering of the year.

Arm’s designs are crucial in manufacturing chips used by some of the biggest semiconductor companies worldwide, including Intel, AMD, Nvidia, and Qualcomm. According to the report, these companies have been engaged in preliminary talks with Arm to become anchor investors in the upcoming IPO.

Arm Seeks to Raise $10 Billion at the IPO

Earlier this year, the chip maker faced a proposition from the British government to list its shares in London, but the company opted to pursue a listing on a US exchange instead. The firm made a confidential filing for a US listing on Nasdaq in April, indicating a strategic intent to expand its presence in the American tech market.

Arm named several financial services companies in the US as the IPO banks in the filing with the regulator. Some of these banks include Goldman Sachs, JPMorgan Chase, Barclays, and Mizuho Financial Group.

Upon listing on the American stock exchange, the SoftBank-owned company plans to raise between $8 billion to $10 billion from investors. If successful, the fundraising will become the largest in the tech industry since Alibaba Group and Meta Platforms conducted their respective IPOs in 2014 and 2012, respectively.

The move to go public comes amid growing interest in artificial intelligence (AI) chips, reflected in the increased market mood towards technologies linked to generative AI and chips. Bankers initially pitched the company’s valuation in a wide range from $30 billion to $70 billion. However, SoftBank’s CEO Rene Haas, who was also appointed CEO at Arm last year, believed that the lower end of the range did not adequately represent the company’s true value.

Industry experts acknowledged the critical but lesser-known role that Arm has played in the tech world for a long time. Bob O’Donnell, president of TECHnalysis Research, highlighted the raised awareness of the firm’s contributions and its vital role in various technologies.

Arm to Expand Its Business Offerings Beyond Smartphone Market

The company, headquartered in Cambridge, has been a relatively unknown player in the tech industry, despite its technology being utilized in nearly every smartphone globally. The company’s core business involves selling the necessary blueprints for microprocessor designs and licensing instruction sets that govern how software programs interact with these chips.

However, under the leadership of Haas, Arm is now on a mission to diversify its reach beyond the smartphone market, which has experienced limited growth in recent years.

The company’s CEO is setting his sights on more advanced computing ventures, explicitly targeting the burgeoning chip market for data centers dedicated to cloud computing and artificial intelligence applications.

Giant corporations like Amazon have already adopted the company’s chips for its Amazon Web Services (AWS) due to their energy efficiency and economic viability.

Artificial Intelligence, Business News, IPO News, News, Technology News
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