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Mobile chip firm Arm files for IPO set to be 2023’s biggest and a boon for Japanese owner SoftBank

  • The semiconductor design firm did not disclose proposed terms for the sale, but it is expected to seek a valuation of US$60 billion to US$70 billion
  • A successful debut by Arm would provide a windfall for SoftBank founder Masayoshi Son, whose Vision Fund lost a record US$30 billion last year

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A smartphone with a displayed Arm logo placed on a computer motherboard in this illustration taken on March 6, 2023. Photo: Reuters
Bloomberg
SoftBank Group Corp’s Arm Holdings took a step toward what is set to become the biggest US initial public offering of the year, a bet that the once-obscure designer of phone chips can flourish in the era of artificial intelligence (AI) computing.
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In a long-awaited regulatory filing on Monday, Arm said the offering is being led by Barclays, Goldman Sachs Group, JPMorgan Chase & Co and Mizuho Financial Group. The document listed 24 other underwriters below that top tier – with Morgan Stanley notably absent.

A successful debut by Arm would provide a windfall for SoftBank founder and chief executive Masayoshi Son, whose Vision Fund lost a record US$30 billion last year. It could also spur dozens of companies to pursue – or further delay – their own IPO plans. That includes businesses like online grocery-delivery firm Instacart, marketing and data automation provider Klaviyo, and footwear maker Birkenstock.

Arm plans to start its roadshow the first week of September and price the IPO the following week, Bloomberg has reported. The company didn’t disclose proposed terms for the share sale in the document, but it’s expected to seek a valuation of US$60 billion to US$70 billion. Arm, based in Cambridge, UK, also has held talks with some of its biggest customers about backing the IPO.

While Arm had been aiming to raise US$8 billion to US$10 billion in the IPO, that target could be lower since SoftBank has decided to hold onto more of the company after buying Vision Fund’s stake in it. That transaction valued Arm at more than US$64 billion, based on the filing.

Even so, the offering promises to give the struggling IPO market its biggest lift in almost two years. The listing is poised to be the largest in the US since electric-vehicle maker Rivian Automotive’s US$13.7 billion offering in October 2021. It could rank near or even just below the tech industry’s largest-ever IPOs: Alibaba Group Holding’s US$25 billion 2014 offering and 2012’s US$16 billion debut by Meta Platforms, then known as Facebook Inc.
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Arm’s target valuation reflects a belief that it will benefit from the stampede toward artificial intelligence chips and generative AI – an industry shift that has helped give chip maker Nvidia Corp. a US$1.2 trillion valuation.

“A strong performance from Arm will not only be a major windfall for SoftBank, but also reinforce its AI strategy by showing the market hype around AI hasn’t waned,” said Kyle Stanford, an analyst at PitchBook.

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