A smartphone with a displayed Arm Ltd logo is placed on a computer motherboard in this illustration taken March 6, 2023.
Dado Ruvic | Reuters
Chip design firm Arm said in a Tuesday filing that Apple, Google-parent Alphabet, Nvidia and other technology companies are interested in buying up to $735 million in its shares as it seeks to go public on Nasdaq.
The investments might not happen, but the fact that these companies are considering them underlines the importance of Arm, whose designs are used for processors in data center servers, consumer devices and industrial products.
Chip foundry operators Intel, Samsung and TSMC are interested in investing alongside the three trillion-dollar technology companies, along with AMD and MediaTek, which make chip designs based on Arm architectures. Cadence Design Systems and Synopsys, which make electronic design automation software for processor development, have also expressed interest, according to a revised prospectus for Arm’s share sale. As part of the deal, Arm could wind up with a $52 billion market capitalization and almost $5 billion in new cash.
Initial public offerings in technology have been rare in the past two years, with higher interest rates making investors less willing to place bets on risky high-growth companies. Arm, established in 1990, is different. It was listed in London and New York before SoftBank bought it for $32 billion in 2016. It produced a $105 million profit on $675 million in revenue in the second quarter.
In 2020 Nvidia announced plans to acquire Arm from SoftBank for $40 billion, but regulators in the U.S. and the United Kingdom pushed back. The two companies dropped the transaction in 2022, paving the way for Arm’s current U.S. IPO. Nvidia has introduced its own Arm-based chip that can work alongside its own graphics processing units.
The fact that Nvidia wasn’t able to buy Arm didn’t stop Nvidia’s co-founder and CEO, Jensen Huang, from talking up Arm during the chip-design company’s IPO roadshow.
“Arm is an extraordinary company, and everybody in the world knows how fond i am of this company and of this platform and this franchise and world-class management team,” Huang says in his signature leather jacket during the pre-recorded roadshow video.
Nvidia is collaborating with Arm on a new cloud data center ecosystem, Huang said. Historically Intel chips have dominated in data center servers.
Huang isn’t Arm’s only external promoter. Rick Tsai, vice chairman and CEO of MediaTek, appeared during Arm’s virtual roadshow, saying more products drawing on the two companies’ products will appear over time.
WATCH: Portfolio manager discusses the investment risks around Arm’s IPO
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