SoftBank-Owned Chip Designer Arm Aims to be the Largest IPO of 2023

Is the IPO window finally open?

SoftBank acquired Arm in 2016 for $32 billion. KAZUHIRO NOGI/AFP via Getty Images

In a season of sparse initial public offerings (IPOs), the public debut of the chip designer Arm will be a litmus test of the market after inflation and interest rate increases have made investors hesitant.

Arm, a provider of chip technology owned by Japanese conglomerate SoftBank (SFTBF), started their IPO roadshow after filing an amended F-1 with the SEC today (Sept. 5) . The company is offering 95.5 million shares priced at $47 to $51 apiece, which would give it a valuation between $50.2 billion and $54.5 billion, making it the largest IPO since the electric carmaker Rivian’s public debut in 2021.

SoftBank acquired Arm for $32 billion in 2016 and will still own roughly 90 percent of the company after it goes public, as stated in today’s F-1 filing. Arm shares are expected to begin trading on Nasdaq next week under the ticker symbol ARM.

Arm primarily designs and sells the intellectual property rights to their ARM CPUs, which are almost ubiquitously found in all manner of smartphones, computers and smart televisions. Arm also sells IP rights to their own line of GPUs, and has said it  plans to incorporate artificial intelligence technologies into their chip designs.

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Several tech giants, including Alphabet, Apple, Samsung and Nvidia, have already agreed to invest significantly once the company goes public. If Arm’s IPO sees great success, it may signal investors are opening up to technology companies again and encourage more IPOs to enter the market.

While Arm’s commitment to A.I. may excite investors as the technology develops, there is some speculation on how much it will benefit Arm. Sara Russo, an analyst with Bernstein, said in a letter to clients that, while Arm is in a good position to benefit from A.I., little evidence has been provided as to how A.I. will impact sales.

For the fiscal year ended March, Arm reported a revenue of $2.68 billion, down roughly 1 percent from the previous fiscal year. Arm attributed the revenue decrease to supply shortages for smartphones and computer chips due to Covid. If world events cause such a shortage again, Arm may not see as much growth as anticipated.

SoftBank-Owned Chip Designer Arm Aims to be the Largest IPO of 2023