July 13, 2024
UK chip designer Arm valued at $50B ahead of today’s IPO

And thus, after months of anticipation and speculation, the day of Arm’s IPO is upon us. The SoftBank-owned chip design company will begin trading in New York today, Thursday, with shares priced at $51 (€47.51) apiece. This gives Arm a valuation of $52.3bn (€48.7bn). 

Japanese SoftBank intends to hold onto just above 90% of the company. Still, the heavily oversubscribed round is set to raise about $4.9bn for Arm’s owners. Big tech customers of Arm’s designs have shown a massive interest in buying shares, and the banks underwriting the listing closed orders on Tuesday, a day earlier than originally planned. 

Despite being central to the global semiconductor industry, Arm has never made a single computer chip itself. What it makes instead are the blueprints for chips. It then licences the intellectual property and the instruction sets to other companies, be that Apple, Nvidia, Qualcomm, Google, Samsung, Alibaba, or ByteDance. Indeed, since the company was founded in Cambridge, UK, in 1990, ​​Arm estimates that more than 250 billion chips using its technology have been sold globally. 

As one might imagine, despite often being referred to as the Switzerland of semiconductors, this puts Arm right in the middle of the ever increasing complexity of the “chip war” landscape and value chain. There may be bumpy roads ahead with increasing political pressure, and a potential, open source challenger in RISC-V. 

Watershed moment for tech listings

The company’s CEO, Rene Haas, is the first American to run Arm. He is expected to ring the Nasdaq opening bell on Thursday. The company has declined all requests for comments leading up to the big day. Meanwhile, how Arm performs is also set to influence the market for public listings for tech companies going forward, with a number of Silicon Valley startups following the proceedings closely.

At the same time, on Arm’s home soil, investors have not been kind to tech companies that have chosen to list on the London Stock Exchange over the recent years. This is one of the reasons why the crown jewel in the British tech ecosystem — despite months of lobbying from the UK government, decided to focus on a sole listing in New York. 

Sources familiar with the matter told Bloomberg in March this year that while the company had not ruled out a second listing in London down the road, it was “not likely.” However, Tokyo-based SoftBank is making good on its promise when purchasing the business in a $32bn deal in 2016, and is leaving the headquarters in Cambridge.

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