Arm Seeks to Go Public on Nasdaq with Potential Investors
Chip design firm Arm has revealed that tech giants Apple, Google parent Alphabet, Nvidia, and other companies are considering buying up to $735 million of its shares as it prepares to go public on Nasdaq. While the investments are not yet confirmed, the interest from these major players highlights the significance of Arm, whose designs power processors in data center servers, consumer devices, and industrial products.
Interest from Chip Foundry Operators and Other Tech Companies
In addition to the aforementioned tech giants, chip foundry operators Intel, Samsung, and TSMC have also expressed interest in investing alongside them. AMD and MediaTek, which develop chip designs based on Arm architectures, as well as Cadence Design Systems and Synopsys, makers of electronic design automation software, are also considering investment opportunities. The revised prospectus for Arm’s shares sale indicates that the company could achieve a market capitalization of $52 billion and secure nearly $5 billion in new funds.
Arm’s Rare IPO in the Tech Industry
Technology initial public offerings (IPOs) have been relatively uncommon in recent years due to higher interest rates deterring investors from betting on high-growth companies. However, Arm, founded in 1990, stands out as an exception. It was previously listed in London and New York before being acquired by SoftBank for $32 billion in 2016. In the second quarter of this year, Arm recorded a $105 million profit from $675 million in revenue.
Nvidia’s Failed Acquisition and Arm’s U.S. IPO
In 2020, Nvidia announced its intention to purchase Arm from SoftBank for $40 billion, but faced regulatory challenges in the U.S. and the U.K. The deal was eventually abandoned in 2022, leading to Arm’s current plan for a U.S. IPO. Nvidia has since developed its own Arm-based chip, which can be used alongside its graphics processing units (GPUs).
Positive Remarks on Arm from External Figures
Despite the failed acquisition, Nvidia’s co-founder and CEO Jensen Huang has praised Arm during the chip-design company’s IPO roadshow. Huang highlighted Arm’s exceptional qualities, including its platform, franchise, and management team. Nvidia is also collaborating with Arm on a new cloud data center ecosystem, aiming to challenge Intel’s dominance in this sector. Additionally, Rick Tsai, vice chairman and CEO of MediaTek, spoke during Arm’s virtual roadshow, indicating further collaboration between the two companies.
Watch: A portfolio manager discusses the investment risks surrounding Arm’s IPO.
