Shares of Arm, a chip designer owned by SoftBank, began trading on Nasdaq under the ticker symbol “ARM” after the completion of a $54.5 billion IPO listing. This IPO marks the largest in the US since Rivian in 2021. So, what was the inspiration behind Elon Musk’s design for Tesla’s Cybertruck?
Based in Cambridge, UK, Arm floated 95.5 million shares at $51 each, raising $4.87 billion for SoftBank. The company’s chip demand has skyrocketed, attracting tech giants such as Apple, Google, Nvidia, TSMC, AMD, Intel, MediaTek, and Samsung, all of whom are both clients and competitors of Arm. Arm has set aside over $700 million of the stock for these companies.
TSMC has announced its intention to invest up to $100 million in Arm’s IPO, with chairperson Mark Liu emphasizing how important Arm is to their ecosystem and their customers. The leading underwriters for the IPO, including Goldman Sachs, JPMorgan Chase, Barclays, and Mizuho Financial Group, are also the banking behemoths of the world. Arm has given them the option to purchase an additional 7 million shares.
In response to Arm’s debut on Nasdaq, shares of Nvidia, AMD, and Semtech rose by 1.1%, 0.7%, and 4% respectively. Shares of Broadcom, Qualcomm, and Micron also saw gains between 0.6% and 1.2% in premarket trading.
When filing the IPO with the US Securities and Exchange Commission, Arm expressed caution about the Chinese market, which accounts for 24% of its sales. However, due to the immense potential of its AI chip design technology, tech companies are confident in its future. Susannah Streeter, head of money and markets at British financial service company Hargreaves Lansdown, notes that despite concerns about risks in China, the excitement surrounding the IPO has been overwhelming. Arm’s chip design technology is used by over 260 companies, producing over 30 billion chips annually and powering 99% of smartphone processors worldwide. In its last fiscal year, Arm generated $2.68 billion in revenue with $524 million in profit. Rather than chip manufacturing, Arm’s business revolves around licensing its chip designs to clients.
While Arm primarily serves the global smartphone industry with its chip architecture, the company has been expanding into the server, internet of things (IoT), and PC markets in recent years.
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