Chip designer Arm files for public listing that could revive flat IPO market

Chip designer Arm has filed for an initial public offering, which is expected to be the biggest IPO of the year.

The UK-based company announced on Monday that it’s applied to sell shares on the Nasdaq stock exchange in the US — a move that is a big blow to its home country. Arm is reportedly eyeing a valuation of between $60bn (€55bn) to $70bn (€64bn).

The lofty target stems from the ubiquity and efficiency of Arm’s semiconductor architectures — particularly in mobile devices. Arm estimates that more than 99% of the world’s smartphones use Arm-based chips.

In recent years, however, this market has shrunk, leading Arm to further expand into different markets, such as AI, automotive, and cloud computing.

In the IPO filing, Arm was bullish about the prospects for growth:

“We estimate that approximately 70% of the world’s population uses Arm-based products, and the scale of Arm’s reach continues to expand, with more than 30 billion Arm-based chips reported as shipped in the fiscal year ended March 31, 2023 alone, representing an approximately 70% increase since the fiscal year ended March 31, 2016.”

The listing comes a year after the collapse of a $40bn (€36.7bn) takeover of Arm by Nvidia.

In 2020, Nvidia agreed to buy Arm from SoftBank, the Japanese conglomerate that has owned the British company since 2016. The acquisition would have been the most expensive ever deal between chip companies, but it was terminated amid scrutiny from regulators. Softbank chose to pursue the IPO instead.

The filing arrives in a largely dormant IPO market. Tech valuations have plummeted during the economic downturn, with higher inflation and interest rates spooking potential investors. If successful, the Arm listing could give the market a valuable bounce. It would also provide a big boost for Softbank, which last year posted a $32bn loss at its Vision Fund investment arm.