SoftBank, the Japanese conglomerate, has unveiled plans to list its chip design company, Arm, in the United States. Arm has filed for a Nasdaq listing, aiming to go public in a period when tech IPOs are typically slow. The company, which wants to trade under the ticker symbol “ARM,” reported $524 million in net income on $2.68 billion in revenue for its fiscal 2023. Although its revenue was slightly lower than the previous year, Arm remains a critical player in the chip industry, with licenses for its instruction set used in mobile, PC, and server chips. Arm’s chips are utilized by major companies such as Amazon, Alphabet, Apple, Intel, Nvidia, Qualcomm, and Samsung, with over 30 billion chips shipped in its fiscal 2023.
Initially, SoftBank attempted to sell Arm to chip giant Nvidia, but the deal faced regulatory challenges due to concerns over competition and national security. SoftBank took Arm private in 2016 in a $32 billion deal. Arm’s significance lies in its role as a chip architecture designer that powers 99% of smartphones, including those produced by Apple, Google, and Qualcomm. However, the company is experiencing challenges due to a slowdown in smartphone demand, leading to a decline in net sales. In its filing, Arm emphasized its technology’s importance for AI applications, positioning itself as an essential player in AI systems. Arm faces competition from x86 and RISC-V instruction sets, and its three largest customers account for 44% of its total revenue.
Arm’s IPO comes at a time when investors are increasingly interested in next-generation semiconductors, driven by the demand for artificial intelligence. Despite this, the tech IPO market has been lackluster in recent times. Arm’s offering could be seen as a benchmark for the demand of new offerings in the market. Other companies, such as Instacart, are reportedly preparing to submit IPO paperwork to the Securities and Exchange Commission. Overall, Arm’s listing has the potential to make a significant impact on the chip industry and the broader tech IPO landscape.
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