Arm’s public listing is set to break records
On August 21st Arm, a chipmaker whose designs power most of the world’s smartphones, filed for an initial public offering (ipo) that could turn out to be the largest of the year. The route taken by the British firm, which is owned by SoftBank Group, a Japanese technology conglomerate, has not been straightforward. In 2016 SoftBank acquired Arm, then listed on the London Stock Exchange, for $31bn. Four years later a proposed $40bn sale to Nvidia, another chipmaker, was squashed by competition authorities. Now a blockbuster listing is in prospect that would also signal a revival of an ipo market that has been largely dormant since 2022.
Arm will now be listed on America’s tech-heavy Nasdaq as soon as early September, ending a period of uncertainty for the company. SoftBank will retain majority control and pocket all the proceeds from the listing. The ipo filing does not specify how much Arm intends to raise or the chipmaker’s worth, though in August SoftBank paid $16bn for a 25% stake which was held by the group’s Vision Fund, a tech investment vehicle, putting Arm’s value at around $64bn. The speculation is that it will seek around $60bn-70bn, or around 21-25 times annual sales. That would place it closer to the lofty multiples of Nvidia, the leader of the artificial-intelligence gold rush, than the chasing pack (see chart).
The ubiquity of Arm’s chip designs may seem to justify a juicy valuation. Unlike its competitors, which design, manufacture and sell chips, Arm deals only in intellectual property. It makes money by licensing its designs, which customers can modify if required, and takes a small cut from every chip built. Using Arm’s off-the-shelf designs allows companies to build a processor at a fraction of the cost of designing it themselves. As a result, its chips are everywhere.
2023-08-23 10:39:35
Source from www.economist.com
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