Aug. 22 (UPI) — Arm, a chipmaker based in England and owned by SoftBank of Japan, has filed for an initial public offering (IPO) on the tech-focused Nasdaq stock exchange, with expectations that it could become the year’s largest IPO. However, the company’s filing reveals various risks it faces, including geopolitical tensions and constraints in the supply chain.
No specific share price was mentioned in the filing, but analysts at financial services firm Bernstein estimate its fair-market value to be around $40 billion, which is $12 billion more than what SoftBank paid to acquire the chipmaker in 2016.
Arm’s chip designs are widely used in the digital age, integrated into major smartphones and laptops. During an interview with CNBC last year, Arm CEO Rene Haas emphasized the indispensability of their technology, as they license it to all major industry players.
In its filing with the U.S. Securities and Exchange Commission, SoftBank reported Arm’s net income of $524 million and total revenue of $2.68 billion for the fiscal year that ended in March. Although Arm operates in a rapidly growing market, it acknowledges the risks of intense competition and market share loss to competitors. The company’s revenue is heavily dependent on the adoption of its technology by other companies.
In addition to competition, Arm also lists supply-side constraints and adverse economic and political conditions as potential risk factors that could affect its value.
SoftBank itself reported a net loss of $3.3 billion in the second quarter. However, Arm operates in a market projected to grow by 7% annually, reaching $247 billion by the end of 2025, as stated in the SEC filing.
This IPO comes after the failed $40 billion deal between Nvidia and SoftBank to sell Arm. The U.S. Federal Trade Commission ruled against the deal, citing concerns about one company gaining excessive control over computing technology and designs used by rival firms.
Back in March, Arm announced plans to eliminate nearly 1,000 jobs.
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