Leading microprocessor design company Arm Holdings, a subsidiary of SoftBank Group, has taken a significant step towards its anticipated initial public offering (IPO) by submitting a Form F-1 registration statement to the U.S. Securities and Exchange Commission. The IPO will involve Arm’s standard shares and is set to take place on the Nasdaq Global Select Market. While the exact number of shares and their pricing remain to be determined, experts predict this IPO to be one of the largest in years due to Arm’s pivotal role in the microprocessor design landscape.
Arm’s technology, recognized by its instruction set architecture, powers about 70% of global population’s products, making its presence ubiquitous. In the fiscal year that concluded on March 31, 2023, chipmakers shipped around 30 billion chips using Arm’s technology, marking a remarkable 70% growth since 2016. Over the years, Arm’s technology has already been incorporated into 250 billion chips, and SoftBank’s Chairman and CEO, Masayoshi Son, envisions this number will eventually surpass one trillion.
With its extensive influence, Arm Holdings’s estimated valuation falls between $60 billion and $70 billion. Although the initial goal was to raise up to $10 billion through the IPO, SoftBank’s intention to maintain a larger stake in Arm might alter this figure. SoftBank, a Japanese investment conglomerate, currently owns Arm Holdings and aims to leverage its presence not only in traditional markets but also in the expanding AI computing sector.
Market analysts, like Kyle Stanford from PitchBook, suggest that Arm’s strong performance will significantly benefit SoftBank and reinforce its AI strategy, reaffirming the continued excitement around AI.
Notable tech giants, including Amazon, Apple, Intel, Nvidia, and Samsung, are reportedly considering substantial investments as anchor investors in Arm’s IPO.
Despite its promising trajectory, Arm faces challenges. Recent financial reports indicate a slight dip in revenue to $2.68 billion in the fiscal year ending in March, reflecting wider struggles in the chip industry. Economic uncertainties and government-imposed restrictions, such as U.S. and U.K. export controls against China, pose risks, especially in the Chinese market. Furthermore, the emergence of the open-source RISC-V instruction set architecture presents competition to Arm’s dominance.
