The roadshow is scheduled to begin in the first week of September, with IPO pricing to follow in the subsequent week, said one of the sources, who requested anonymity due to the confidentiality of the discussions. This new valuation target for Arm reflects the market’s recent enthusiasm for generative AI and chip technologies. Earlier this year, bankers had suggested valuations ranging from $30 billion to $70 billion for the chip designer, as reported by Bloomberg News.
However, SoftBank, led by Masayoshi Son, and Arm CEO Rene Haas have always considered the lower end of that range to be too low. While Arm executives may still aim for a valuation as high as $80 billion, the likelihood of reaching that target is uncertain, according to one of the sources. The chip company aims to raise up to $10 billion in the IPO, as reported by Bloomberg News.
Arm’s role has been crucial but relatively unknown for a long time, said Bob O’Donnell, president of TECHnalysis Research. He added, “There’s now an increased awareness of what Arm does and the role it plays.” SoftBank and Arm declined to comment.
Arm filed confidentially for a US listing in April. Several major industry players, including Nvidia Corp. and Intel Corp., have engaged in preliminary discussions to become anchor investors in the IPO, which could be the largest market debut of the year.
Goldman Sachs Group Inc, JPMorgan Chase & Co, Barclays Plc, and Mizuho Financial Group Inc have been named as IPO banks in the filing, as reported by Bloomberg News.
Although Arm’s technology is used in almost every smartphone globally, its significance in the industry has often been overlooked. Arm sells the necessary blueprints for designing microprocessors and licenses instruction sets that determine how software programs interact with those chips. The power efficiency of Arm’s technology has contributed to its widespread adoption in phones, where battery life is crucial.
Since taking over as CEO last year, Haas has been working to expand beyond the smartphone market, which has faced stagnation in recent years. He is targeting more advanced computing, particularly chips for data centers used in cloud computing and artificial intelligence applications. Processors for this market are among the most expensive and profitable in the industry. Amazon.com Inc. has already adopted Arm-based chips for its Amazon Web Services, citing their efficiency in terms of energy and economics. These chips are utilized by 40,000 AWS customers.
Valuations for Arm have fluctuated greatly in line with chip stocks since SoftBank’s acquisition of the company for $32 billion in 2016, which led to its delisting from the London Stock Exchange. SoftBank founder Son has consistently highlighted Arm’s potential for future growth and dominance in chip IP. In February of last year, Son expressed his desire for Arm’s IPO to be “the biggest” in the history of the semiconductor industry.
A successful Arm IPO would represent a rare triumph for SoftBank, which faced challenges after its unsuccessful venture into startup investing. The company’s Vision Fund arm suffered losses of 6.9 trillion yen ($48 billion) in the past two fiscal years due to the decline in the value of its holdings.