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Lanon Wee

Arm chip design firm pursues $52 billion valuation through U.S. IPO

On Tuesday, Arm, a chip design company, submitted a new filing in preparation for its huge upcoming initial public offering (IPO) on the New York Stock Exchange (NYSE). The proposed price range is between $47 and $51, with only 9.4% of the company's shares available for free trading on the NYSE. Prior to the acquisition of Arm by SoftBank for $32 billion in 2016, Arm had been dual-listed in London and New York. Arm announced its plans to become a publicly traded company again with the filing of an F-1 statement to the U.S. Securities and Exchange Commission on Tuesday. The chip manufacturer could bring in up to $4.87 billion with an IPO of 95.5 million American depositary shares on the Nasdaq exchange, with a price ranging between $47 and $51 per share. This would value the company at up to $52 billion. Arm also stated that only 9.4% of its shares will be open to the public. With this offering, SoftBank is anticipated to possess around 90.6% of the firm's existing shares. The underwriters have an option to acquire an extra 7 million ADSs, worth $735 million, which would reduce SoftBank's ownership stake in Arm to 89.9%. The company seeks to invest more in research and development, especially as it steps up its activity in the artificial intelligence area with the launch of certain new chips. Arm is planning the largest technology Initial Public Offering (IPO) of the year, with investors hoping that it will stimulate the IPO market, which has been stagnant since 2022. Last year witnessed numerous macroeconomic and geopolitical complications, including Russia's invasion of Ukraine and central bank interest rate increases, each of which contributed to the dramatic plunge in tech valuations. Therefore, firms backed away from their decision to go public. The Total Addressable Market (TAM) for Arm's technology was reported at $202.5 billion in 2022 and is projected to reach $246.6 billion by the end of 2025, indicating a compound annual growth rate of 6.8%. Arm's processor designs and software platforms are incorporated into over 250 billion chips and used in devices varying from smartphones to supercomputers. Additionally, the company holds a 48.9% share of the semiconductor design market. Contenders such as Intel and AMD have attempted to design their own chip architectures, yet have been unsuccessful so far. Initially, the U.K. government wished for Arm to list on the London Stock Exchange, but it eventually chose to list on the Nasdaq in New York in order to take advantage of the deep pool of institutional investors and tech-centric analysts found there.

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