British Chip Design Giant Arm Files For US IPO
Arm, a British microchip designing giant, has filed for a public listing in the United States of America (USA). Arm…
Arm, a British microchip designing giant, has filed for a public listing in the United States of America (USA). Arm intends to list its shares on the Nasdaq stock exchange in what’s expected to be the biggest US IPO in two years. The company will trade under the symbol “ARM.”
Arm is owned by SoftBank (TYO: 9984), a Japanese technology conglomerate. The company paid $31bn to buy a British-listed Arm in 2016. Arm is returning to the public markets, but in the US rather than its home base of the United Kingdom (UK).
As expected, Arm’s F-1 filing shed light on its finances. The company reported a $524mn net profit on $2.7bn in revenue in the fiscal year ended March 31, 2023. Revenue and profits stayed almost flat from the previous fiscal year but rose 30% from the 2021 fiscal year.
- Arm creates chip designs and licenses them to companies like Intel, Qualcomm, Nvidia, Amazon, and Apple; it collects royalties each time a company manufactures a chip based on its design.
Arm relies on a few companies for most of its sales; Five entities accounted for 57% of revenue in the fiscal year ended March 31, the F-1 filing disclosed. Among these entities include Arm China, the company’s Chinese division.
Arm and its parent company, SoftBank, don’t control the Chinese division. SoftBank owns a 48% stake, and local investors own the rest. Arm China is run independently and pays sublicensing royalties to the British-based Arm; these payments made up 24% of revenue in the fiscal year ended March 31.
- Arm warned of its reliance on Arm China, an independently-controlled entity, to operate in China. If the relationship between both firms deteriorates, Arm might see its Chinese business vanquish.
- Arm also warned of political tensions between the US-UK and China posing a significant risk to its business. For instance, the company said it is unlikely to obtain a US or UK license to export some upcoming chip designs to China.
Arm hasn’t specified how much it intends to raise from the public listing. JP Morgan, Goldman Sachs, Barclays, and Japan’s Mizuho are the lead underwriters for the public listing.