SoftBank-owned chip design startup Arm files blockbuster IPO valued between $60 billion and $70 billion

Arm, a SoftBank-owned chip designer, has formally filed its paperwork for an initial public offering with the Securities and Exchange Commission (SEC) on Monday for a listing on the Nasdaq exchange. The filling places Arm on track to become publicly traded, especially during a historically slow period for tech IPOs.

Arm’s Nasdaq debut will also serve as a major test for the lackluster IPO market, which has largely closed off new listings due to the impact of increasing interest rates, which have dampened appetite for high-risk assets over the past year or so.

Renowned for its integral role in creating chip designs present in nearly all smartphones across the globe, Arm holds a significant position within the tech industry. Amidst the chip industry’s downturn, the UK-based chip maker has demonstrated resilience, outperforming many peers and expanding into thriving sectors like cloud computing. With the increase in demand for AI chips, the company is trying to recover from challenges within the tech market and shift its focus towards the realm of artificial intelligence.

In the fiscal year concluding on March 31, Arm’s sales contracted to $2.68 billion, primarily due to a decline in global smartphone shipments. According to an earnings release from SoftBank, Arm’s sales dropped 2.5% to $675 million (88.5 billion Japanese yen)

The firm also added that over 50% of its royalty revenue during the most recent fiscal year was generated from smartphones and consumer electronics. However, the global smartphone market is predicted to reach its lowest point in a decade this year, as indicated by Counterpoint Research.

Arm’s chip designs play a crucial role in the production of chips for major semiconductor companies worldwide, including Intel, AMD, Nvidia, and Qualcomm. However, the impact of an IPO investment on Arm’s existing commercial relationships with these companies remains uncertain.

Earlier this year, Arm turned down a proposal from the British government to list its shares on the London stock exchange and opted to pursue a flotation on a U.S. exchange instead.

In 2016, SoftBank acquired Arm for $32 billion, marking the largest-ever purchase of a European technology company up to that point. SoftBank’s strategic move was driven by the aim to establish a presence within the burgeoning Internet of Things (IoT) sector. Although IoT represents only a fraction of Arm’s overall business, during that time, it held significant attention in the tech world.

Arm’s influence extends beyond just wearables and smart home devices; the company has diversified its semiconductors into various applications, including the realm of connected cars.

Founded in 1990, Arm was originally initiated as a collaborative effort involving Acorn Computers, Apple (then known as Apple Computer), and VLSI Technology. The company made its debut on both the London Stock Exchange and Nasdaq in 1998. However, in 2016, SoftBank acquired Arm, taking it private in a deal valued at $32 billion.