Why It Matters
The decision holds significance as it will enable SoftBank, the parent company of Arm, to have more capital for further investments in start-ups. SoftBank’s CEO, Masayoshi Son, recently expressed the company’s readiness to shift its focus to “offense” in the field of artificial intelligence during a meeting with investors and analysts.
According to Arm, over 30 billion Arm-manufactured chips were shipped in the previous fiscal year. SoftBank will continue to retain its controlling stake in Arm.
Background
As a 33-year-old company, Arm specializes in developing and licensing blueprints for microprocessors, which are later transformed into chips by other companies. Its energy-efficient technology played a significant role in driving the mobile phone industry, with every iPhone sold by Apple since 2007 incorporating Arm’s technology.
Beyond smartphones, Arm’s technology is utilized in various other products, such as home appliances, cars, and industrial equipment. The company estimates that more than 250 billion Arm-based chips have been sold worldwide.
Arm was publicly traded until SoftBank acquired it in 2016 for $32 billion. Nvidia expressed interest in acquiring Arm in September 2020, but faced opposition from regulators and major chip companies.
Since the failed acquisition, SoftBank has incurred significant losses, with a $3.3 billion loss reported in the first quarter of this year. SoftBank’s technology investment arm, the Vision Fund, recorded a net loss of $3.3 billion but an investment gain of $1.1 billion in the second quarter, compared to a loss of $23.1 billion in the previous year.
What’s Next
The filing for an initial public offering (I.P.O) grants Arm the opportunity to gauge investor interest, which is crucial for the success of the share sale. The company will need to disclose the amount it plans to raise and the desired valuation closer to the sale.
Under the leadership of CEO Rene Haas, who assumed the role in February 2022, Arm has been actively pursuing opportunities in lucrative sectors such as data center servers utilized by companies like Amazon. Investors studying Arm’s offering prospectus will likely focus on the progress of these efforts, the involvement of high-profile investors, and potential changes to the business model aimed at generating more revenue.
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