Arm Holdings filed its long-awaited initial public offering late on 21 August, following last year's failed bid by Nvidia to acquire the UK-based chip architecture company.
Arm has reportedly been seeking to raise $8bn to $10bn at a valuation of $60bn to $70bn, making its IPO the biggest of the year so far, and a number of large tech companies, including Amazon.com, Intel Corp and Nvidia, are reportedly in the mix to be anchor investors.
In a late 21 August filing with the Securities and Exchange Commission, Arm said it was offering to list its US traded shares on the Nasdaq under the ticker symbol "ARM".
Arm, which is owned by Japan's SoftBank Group, was the target of an unsuccessful $40bn acquisition by Nvidia last year. After Nvidia scrubbed the deal and paid a $1.36bn breakup charge following the US Federal Trade Commission's unanimous decision to block it, Nvidia disclosed it paid Arm $750m for a 20-year licence to its technology.
At the time of the breakup, chips sales had hit record highs in 2021, surging 26.2% to a record $555.9bn, fuelled by pandemic-triggered shortages. But the chip industry has since swung to a glut.
Arm listed Barclays, Goldman Sachs, JPMorgan, Mizuho, BofA Securities, Citigroup, and Deutsche Bank Securities among the IPO's underwriters.
Recent reports said SoftBank was in discussions to purchase the 25% stake in Arm that it does not outright own, which is held by its Vision Fund 1, ahead of the IPO.
Arm reported net income of $524m, or 51 cents a share, on revenue of $2.68bn for fiscal 2023, which ended March 31, compared with net income of $549m, or 54 cents a share, on revenue of $2.7bn, in fiscal 2022, and $388m, or 38 cents a share, on revenue of $2.03bn in fiscal 2021.
Arm uses an architecture that is different from the once-standard x86 one built by Intel in the early days of computing.
The company said it has shipped more than 250 billion Arm-based chips since it started in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology. In fiscal 2023, Arm said it shipped 30.6bn chips.
The company said it is going public as the "resources required to develop leading-edge products are significant and continue to increase exponentially as manufacturing process nodes shrink". Transistors are expressed in scales of nanometers, with design costs running at about $249m for a 7-nanometer chip and about $725m for a 2-nm chip.
In fact, a little less than a year ago, Nvidia founder and chief executive Jensen Huang underscored just how much costs had shot up, when critics complained about higher-than-expected prices for the company's new round of gaming chips.
"A 12-inch [silicon] wafer is a lot more expensive today than it was yesterday, and it is not a little bit more expensive, it is a ton more expensive," Huang said.
But that was before 30 November, when Microsoft-backed OpenAI released its generative AI ChatGPT into the wild, triggering a wave of excitement for a technology that luminaries have compared with tech's greatest achievements.
"As the world moves increasingly towards AI- and [machine language]-enabled computing, Arm will be central to this transition," the company said in the filing. "Arm CPUs already run AI and ML workloads in billions of devices, including smartphones, cameras, digital TVs, cars and cloud data centres."
Arm said it is working with Alphabet, GM's Cruise, Mercedes-Benz , Meta Platforms, and Nvidia "to deploy Arm technology to run AI workloads".
Following the filing, Pitchbook venture-capital analyst Kyle Stanford said in emailed comments that Arm was "certainly an intriguing IPO from several different perspectives".
"VC-backed tech listings will surely look at the pricing performance of the IPO, but there aren't as many parallels between Arm and the typical VC-backed unicorn as the market likely hopes," Stanford said. "Arm is riding the AI wave, but it is also reportedly profitable, which continues to be a large point of emphasis for the market."
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