Report: Arm planning $8B+ IPO this year at $50B+ valuation

INFRA

Chip designer Arm Ltd. reportedly plans to go public this year with the goal of raising at least $8 billion from investors.

Reuters reported Arm’s plans late Sunday, citing sources familiar with the matter. The sources believe that the company will begin preparations for its initial public offering in the coming days. It’s expected to file paperwork confidentially for the IPO in April.

Last month, Chief Executive Rene Haas disclosed that the company plans to go public in the U.S. this year. “We’re doing everything we can and are committed to have it happen this year,” Haas stated at the time. 

The exact timing of the listing and other key details have not yet been finalized, according to Reuters’ sources. But it’s believed that Arm will “likely” seek to raise at least $8 billion at a valuation of more than $50 billion. That’s significantly higher than the $40 billion Nvidia Corp. offered in 2020 as part of its unsuccessful attempt to buy the company.

The steep valuation the IPO could reportedly fetch reflects Arm’s vital role in the global semiconductor industry. 

The company sells chip designs that hardware makers use to develop central processing units and other processors. In its fiscal third quarter, which ended Dec. 31, hardware makers shipped 8 billion processors powered by its designs. Overall, its technology has been incorporated into more than 250 billion chips to date. 

Arm designs were historically used mainly in handsets and connected devices. In recent years, however, processors powered by the company’s technology have also begun finding their way into data centers. 

Amazon Web Services Inc. offers multiple cloud instances powered by its custom Graviton processor series, which is based on Arm blueprints. Qualcomm Inc. is reportedly developing an Arm-based server chip as well. Nvidia Corp. and Ampere Computing LLC, a chip company that went public last year, already sell Arm-based data center products.

Arm’s revenue grew 28% year-over-year last quarter, to $746 million, thanks to strong demand for its technology. It reported “double- or triple-digit revenue increases” across the auto, consumer, hardware, infrastructure and connected device markets.

The company regularly updates its product portfolio to help sustain its revenue momentum. In September, it introduced upgraded Neoverse processor designs for the data center market. A few months earlier, it debuted new chips optimized to power connected devices. 

Arm is a subsidiary of Softbank Group Corp., which acquired the chip designer in 2016 for $32 billion. Reuters reported on Sunday that SoftBank has hired Goldman Sachs Group Inc, JPMorgan Chase & Co., Barclays and Mizuho Financial Group to lead the upcoming IPO. It’s believed the company could also recruit a fifth lead underwriter to help manage the IPO.

Photo: Arm