UK-based chip designer Arm will launch in September, and its biggest licensees will be among those bidding for big stakes from day one.
So speaks Japan Nikkeiwhich on Wednesday announced an IPO on the US NASDAQ index – an outcome that will not please the UK government, had been pushing for any float to be on a UK stock exchange.
The report suggests Arm could be valued at $60 billion at the time of the IPO, so the UK lobbying is understandable.
Yoshimitsu Goto, chief financial officer of current Arm owner SoftBank, lent credence to the report. During an earnings call on Tuesday, he was asked about an IPO by the chip designer and replied “Sorry, I can’t share. I’m not allowed to share anymore. Forgive me. But I don’t think it’s far away, when you have more information. Which is kind of like sharing.
NikkeiThe report adds that heavy users of Arm’s IP – including Nvidia, Apple and Samsung – will bid for shares as soon as they hit the market. So will Intel, the outlet reported, confirming a past rumor.
Arm will welcome these offers and is happy that “a few percent” of its stock ends up in the hands of its biggest customers – even if NikkeiThe report suggests that “by owning shares of Arm, chipmakers hope to influence the direction of Arm.”
Whether the investors/licensees intend to twist their arm simply by throwing their weight or acquiring enough certificates to be able to demand a seat on the board of directors is not addressed in the story.
To complicate matters, Arm is currently owned by Japan’s SoftBank Group, which owns 25% of its Vision fund business and the rest of its general business.
As it happens, SoftBank released its first quarter 2023 results on Tuesday and in the earnings call, Chief Financial Officer Yoshimitsu Goto said that “Vision Fund will not only invest in public companies, but also in private companies. , which includes Arm” before adding “When Arm is listed and when its valuation is appreciated by the market, I think Arm will contribute a lot to Vision Fund.”
Whether that means SoftBank intends to keep an arm’s length or cash in, was not discussed. SoftBank has used both tactics in the past – offloading much of its stake in Alibaba to produce cash, while holding onto more certificates as a longer-term investment.
SoftBank also repeated its previous observation that Arm filed preliminary documents with the U.S. Securities and Exchange Commission, without specifying the size and price range of any public offering.
As The register reported in May 2023, when the project was revealed, SoftBank’s proposal appeared to be structured to retain control of Arm.
How much Arm goes into circulation and what the purported stakes of the big buyers allow them to do is therefore a matter of delightful speculation. Apple, Nvidia and Samsung have all bet big on Arm, and will want it to be stable and innovate. Intel wants its manufacturing business to be good at getting Arm designs into production.
Back to those results from SoftBank: Arm produced $641 million in license and royalty revenue for the quarter, compared to $719 million in the first quarter of 2022.
SoftBank executives suggested there was no need to worry, as the global chip industry is currently in a downturn and Arm’s three-year compound annual growth rate is 14%. With AI set to drive chip sales and the increased use of technology in automotive settings to increase consumption, SoftBank sees Arm flexing its muscles in the future.
The conglomerate also told investors it is going on the offensive, having recently spent more than $1.8 billion after making almost no investments in 2022, and plans to make more investments soon.
It is hoped that these investments will boost returns for SoftBank’s Vision Fund, which returned to positive cash flow after five quarters.
But SoftBank’s global operations produced a loss of $3.3 billion. Executives appeared calm, attributing some of the losses to falling stock prices of the recipient companies. ®
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