Arm, controlled by SoftBank, submitted paperwork on Monday to belisted on the Nasdaq. The British chip manufacturer is seeking to go public during a time of limited U.S. IPOs. SoftBank had consented to purchase Arm for $32 billion back in 2016.
On Monday, SoftBank-owned chip designer Arm filed for a Nasdaq listing, hoping to go public during a usually quiet period for tech IPOs. The specified stock ticker symbol is "ARM".In its most recent fiscal year ending in March 2023, Arm saw net income of $524 million and revenue of $2.68 billion. While this figure was slightly lower than the company's 2022 sales of $2.7 billion, it was still a noteworthy performance as Arm's technology is used in over 30 billion chips shipped in the 2023 fiscal.Arm is a significant chip company, licensing the instruction set at the core of many mobile, PC, and server chips. Of late, it has been aiming to supply more complete chip designs, which is a more profitable venture. These chips are employed by companies like Amazon, Alphabet, AMD, Intel, Nvidia, Qualcomm, and Samsung, while Arm's technology is embedded in Apple's chips for iPhones.Earlier, SoftBank's plan to sell Arm to chip giant Nvidia faced much opposition from regulators worried over competition and security issues. Consequently, the Japanese firm bought Arm for $32 billion in 2016, taking the company private.At this stage, Arm has not specified a share price, making it impossible to calculate its exact valuation.
Arm, with nearly 6,000 employees, is envisaged as a major contributor to the realm of consumer electronics. Its designed chip architectures are found in almost all smartphones and this makes the company a key provider of technology to Apple, Google and Qualcomm. The company was set up as a combined venture between different entities and Apple in 1990 to create a low-power processor for handheld devices. Publicly traded since 1998, it was then taken private by SoftBank in 2016. Nevertheless, the company has its front face towards the headwinds of a declining demand for products like smartphones, which is affecting the performance and market of chip firms worldwide. Arm's net sales dropped by 4.6% year-on-year in the second quarter, along with the shift of the unit to a loss according to SoftBank's earnings release. SoftBank's Vision Fund has, nearly, lost billions of dollars from tech investments that went downhill. In the filing, Arm expressed its opinion that its technology is an essential element for Artificial Intelligence applications, despite putting its focus on the processor, and not graphics processors, to create significant AI models. It's competition is identified as x86, the Intel and AMD processor's instruction set, plus RISC-V, an open-source instruction set backed by a few leading tech companies. On the matter, it has been revealed that 44% of the company's total revenue is attributed to its three leading customers, with Arm China as the biggest contributing 24%. Qualcomm follows with 11%, although currently in dispute with Arm due to a violation in its license. With the increasing popularity of Artificial Intelligence, especially in generative AI applications, and its investment in semiconductors, the stock price of NVIDIA has tripled this year. However, the tech IPO market has been relatively quiet over the past 20 months, with only Mobileye being Intel's spin off in October 2021 and the stock up by only 17% since its first close. Many investors may be anticipating Arm's offering to decide the need for fresh IPOs, especially with Instacart's forthcoming paperwork filing to the SEC.
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