Arm, the Chip Designer, Files for an I.P.O. Expected to Be Among the Largest
August 21, 2023Revised at 7:33 in the evening Eastern Time
Arm, the chip design firm owned by SoftBank, submitted an application to go public on the Nasdaq stock exchange on Monday, with predictions pointing towards it being one of the biggest initial public offerings in recent times.
The submission arrives after a year and a half since Nvidia, the chip manufacturer based in Silicon Valley, abandoned its bid to purchase Arm for a sum of $40 billion. The Federal Trade Commission had taken legal action to prevent the transaction from taking place.
Arm did not disclose a potential stock value in its submission on Monday.
The business disclosed a total income of $2.68 billion for the financial year that concluded in March, which was slightly lower than its $2.70 billion from the previous year. In the most recent quarter, Arm observed a decrease in net earnings, with 10 cents per share compared to the prior year's 22 cents.
The shift will offer SoftBank, the parent company of Arm, additional funds to continue investing in new businesses. During a recent gathering with investors and analysts, Masayoshi Son, the CEO of SoftBank, expressed the company's willingness to transition to an active role in the realm of AI.
In the document, Arm stated that over 30 billion chips produced by Arm were sent out during the previous financial year. SoftBank will continue to maintain its majority ownership in Arm.
Arm, a well-established company that has been around for 33 years, creates and grants the rights to designs for microprocessors which are then transformed into chips by other companies. Its power-saving technology has had a significant impact in driving the growth of mobile phones, including all Apple iPhones sold since 2007.
However, Arm technology can also be seen in a wide range of other items, such as household gadgets, automobiles, and machinery used in industries. According to the company's approximations, over 250 billion chips utilizing Arm technology have been purchased.
Arm was previously a publicly traded corporation until 2016, at which point it was acquired by SoftBank for a staggering $32 billion. Fast forward to September 2020, when Nvidia attempted to acquire Arm, but faced fierce opposition from both regulatory bodies and notable players in the chip industry.
SoftBank has experienced substantial financial setbacks following the unsuccessful acquisition, with a reported decline of $3.3 billion in the initial quarter of this year. The technology investment division of SoftBank, known as the Vision Fund, recorded a net loss of $3.3 billion. However, there was a notable investment gain of $1.1 billion during the subsequent quarter, following a staggering loss of $23.1 billion in the same period last year.
The initial public offering (IPO) documentation allows Arm to start assessing the level of interest from potential investors, which will play a crucial role in the sale of shares. However, the company has yet to reveal the specific amount it intends to raise through the IPO or the valuation it is targeting. These details will be disclosed nearer to the time of the sale.
Rene Haas, who took on the role of Arm's CEO in February 2022, has been driving the company towards more profitable sectors such as data center servers utilized by companies like Amazon. The success of this endeavor, along with notable investors and any possible alterations to Arm's business model aimed at generating more income, will undoubtedly be crucial points of interest for investors scrutinizing its offering prospectus.
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In a previous edition of this article, there was an error in stating the quantity of Arm-produced chips dispatched during the previous financial year. It exceeded 30 billion chips, rather than being valued at $30 billion.
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