SoftBank-backed chip design company Arm reveals it is applying for a U.S. IPO

Arm Ltd logo with American flag

The Arm Ltd logo and the American flag can be seen in this illustration taken on March 6, 2023.

SoftBank Group Corporation arm After the chip designer disclosed its initial filing, the company reported a 1% decline in annual revenue due to slowing smartphone sales. people It is expected to be the largest IPO this year.

armThe stock listing is expected to revive a sluggish IPO market, which last year saw several high-profile startups postpone their plans due to market volatility. The British company has weathered the chip industry downturn better than most and is moving into still-booming areas like cloud computing.

For the year ended March 31, armSales fell to $2.68 billion, mainly affected by a decline in global smartphone shipments. Sales fell 2.5% to $675 million in the quarter ended June 30.

arm The company said more than 50% of its royalty revenue in its most recent fiscal year came from smartphones and consumer electronics. The global smartphone market is expected to hit its lowest point in a decade this year, according to Counterpoint Research. armRevenue fell slightly, indicating an increase in its per-wafer rate, despite heavy reliance on smartphones for royalties.

The company, whose chip technology powers most smartphones including iPhones, did not disclose the number of shares it planned to sell or the valuation it was seeking.Reuters previously reported that SoftBank plans to sell about 10% of its shares armshares in the IPO and is seeking to value the chip design company at between $60 billion and $70 billion.

arm It had previously planned to raise US$8 billion to US$10 billion through the IPO, but after SoftBank acquired 25% of the shares, it is now expected to raise less funds arm Reuters first reported in early August that the company did not hold the assets directly from the Saudi-backed Vision Fund. SoftBank confirmed the deal with the Vision Fund in a filing on Monday.

IPO’s second breakthrough

Founded in 1990, arm It was a joint venture between Acorn Computers, Apple Inc (then known as Apple Computer) and VLSI Technology.The company is peopleThe company was listed on the London Stock Exchange and Nasdaq from 1998 until its acquisition by SoftBank in 2016 arm Private investment of $32 billion.

SoftBank begins preparations for IPO arm Last year, a $40 billion deal to sell the company to Nvidia failed due to objections from U.S. and European antitrust regulators.

arm Make money from upfront licensing fees on the technology, then pay royalties on every chip sold armcustomer of. The company has been expanding those royalty revenues, saying the latest version of its technology “has the potential to result in higher royalty opportunities for us per device,” according to its filing.

armThe chip designs dominate the smartphone industry, but they are also used in laptops made by Apple and some Windows machines.

armtechnology has also gained 10% market share in the field of cloud computing, of which armChip-based chips are used in networks and central processing units in servers.

the only place arm What hasn't made significant headway yet is the artificial intelligence (AI) market, where Nvidia is the leader, although Nvidia does offer armprocessor-based processor as part of one of its “super chip” products, which combines an artificial intelligence chip with a traditional central processing unit.

arm It said 24% of its revenue in its most recent fiscal year came from China.This is largely consistent with many other companies in the semiconductor industry, but armAll income comes from arm China is an independent company with only an indirect 4.8% stake.

arm Represents export controls imposed by the United States and the United Kingdom goGovernment policies and the general downturn in China's economy mean “we expect royalty revenue to continue to decline and licensing revenue from” China to likely decline.

In early August, Reuters reported that SoftBank had held talks with a number of technology companies, including Amazon and Nvidia, which were considering investments. armof initial public offerings.

armThe company's listing is expected to provide a much-needed boost to the IPO market, with big names including grocery delivery service Instacart, marketing automation company Klaviyo and German sandal maker Birkenstock expected to go people in the coming weeks.

arm Said it expects to be listed on Nasdaq and trade under the ticker “”arm'.

barclays bank, goldman Sachs, JPMorgan Chase and Mizuho Financial Group are the lead underwriters of the offering. armThe company has selected a total of 28 banks for the IPO, not traditional “left-led” banks, and will share underwriter fees equally among the four major banks.

Apple, Samsung to invest in SoftBank's Arm at IPO – Nikkei

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SoftBank's Arm Ltd aims for valuation of up to $70 billion in September IPO – Bloomberg News

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