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Arm, Chip Designer Owned by SoftBank, Files for Nasdaq Listing During Slow Tech IPO Period

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Ziad Najjar
Ziad Najjar is an Egyptian author who studied business and finance in the United States and has a keen interest in media. He combines his expertise in these fields to create informative and engaging works accessible to a broad audience.

Arm Files for Nasdaq Listing, Prepares for Tech IPO

Arm, the chip designer owned by Japan’s SoftBank, has filed for a listing on the Nasdaq stock exchange. This move positions the company to go public during a period that historically sees fewer tech initial public offerings (IPOs).

The company plans to trade under the ticker symbol “ARM.”

In its fiscal year 2023, which ended in March, Arm reported $524 million in net income on $2.68 billion in revenue. While its 2023 revenue was slightly lower than its previous year’s sales of $2.7 billion, Arm remains one of the most important chip companies in the industry.

Earlier this year, Arm filed confidentially for a U.S. listing after previously announcing its intention to go public in the U.S. rather than the U.K., which was seen as a setback for the London Stock Exchange.

Arm is known for selling licenses to an instruction set that is at the core of nearly every mobile chip, as well as being increasingly present in PC and server chips. The company has also focused on selling more complete chip designs, which is a more profitable business.

According to the filing, Arm’s chips are used by major companies such as Amazon, Alphabet, AMD, Intel, Nvidia, Qualcomm, Samsung, and even Apple for its iPhones. In its fiscal year 2023, Arm’s technology was included in over 30 billion chips that were shipped. The company typically earns a fee for each chip that uses its technology.

Initially, SoftBank had planned to sell Arm to chip giant Nvidia, but the deal faced significant regulatory pushback due to concerns over competition and national security. As a result, SoftBank made Arm a private company in 2016 through a $32 billion deal.

Arm has not provided a projected share price, so its valuation is not yet estimable.

A Key Player in Consumer Electronics

With just under 6,000 employees, Arm plays a crucial role in the world of consumer electronics by designing the architecture of chips found in 99% of all smartphones. This makes Arm a key technology provider for companies like Apple, Google, and Qualcomm.

The company was originally founded in 1990 as a joint venture between several companies, including Apple, with the goal of creating a low-power processor for battery-powered devices. After going public in 1998, Arm was later taken private by SoftBank in 2016.

However, Arm is currently facing challenges due to a slowdown in demand for products like smartphones, which has impacted chip companies across the industry. According to SoftBank’s earnings release, Arm’s net sales declined by 4.6% year-on-year in the second quarter, and the unit also experienced a loss.

In its filing, Arm highlighted the importance of its technology in AI applications, particularly in central processors. While Arm focuses on CPUs rather than graphics processors required for large AI models, the company stated that the CPU remains vital in all AI systems, whether used alone or in combination with co-processors like GPUs or NPUs.

Arm identified x86, the instruction set used in Intel and AMD processors, as well as RISC-V, an open-source instruction set supported by several major tech companies, as its competition.

Arm’s entry into the public market comes at a time when investors are showing strong interest in next-generation semiconductors, driven by the demand for artificial intelligence, particularly generative AI applications. Chipmaker Nvidia, a key player in generative AI, has seen its stock price triple this year.

However, the tech IPO market has been relatively inactive for the past 20 months, with no significant venture-backed deals since December 2021. Arm’s offering will be closely watched as an indicator of investor appetite for new offerings. Other late-stage startups, such as grocery delivery company Instacart, are reportedly preparing to submit IPO paperwork to the SEC.

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