In a filing on Tuesday, Arm, a chip design firm, revealed that it has attracted the interest of tech giants such as Apple, Alphabet (Google’s parent company), Nvidia, and others who are considering purchasing hundreds of millions of dollars worth of its shares as it prepares to go public on Nasdaq. While these investments are not guaranteed, their contemplation underscores the significance of Arm, whose designs are utilized in processors for data center servers, consumer devices, and industrial products.
Joining the fray are chip foundry operators Intel, Samsung, and TSMC, along with AMD and MediaTek, both of which create chip designs based on Arm architectures. Additionally, Cadence Design Systems and Synopsys, companies specializing in electronic design automation software for processor development, have expressed their interest in Arm’s shares sale. This arrangement could potentially lead to Arm achieving a market capitalization of $50 plus billion and acquiring nearly $5 billion in new capital.
In recent years, technology-focused initial public offerings have been infrequent, partly due to rising interest rates, which have made investors more cautious about backing high-growth, riskier enterprises. Arm, however, stands apart. Established in 1990, it was previously listed in London and New York before being acquired by SoftBank for $32 billion in 2016. In the second quarter, Arm reported a profit of $105 million on $675 million in revenue.
In 2020, Nvidia had announced plans to acquire Arm from SoftBank for $40 billion, but faced opposition from U.S. and U.K. regulators, leading to the cancellation of the transaction in 2022. This paved the way for Arm’s current U.S. IPO. Nvidia has also introduced its own Arm-based chip, which can complement its graphics processing units.
Despite the unsuccessful acquisition attempt, Nvidia’s co-founder and CEO, Jensen Huang, continues to extol Arm’s virtues during the chip-design company’s IPO roadshow. In a prerecorded video, Huang, clad in his signature leather jacket, described Arm as an exceptional company and expressed his admiration for its platform, franchise, and world-class management team. Furthermore, Nvidia is collaborating with Arm on a new cloud data center ecosystem, challenging the historical dominance of Intel chips in data center servers.
Arm has not only garnered support from Nvidia but also from other external advocates. Rick Tsai, vice chairman and CEO of MediaTek, participated in Arm’s virtual roadshow, hinting at future products that will leverage the offerings of both companies.
