The world's largest IPO this year may be born! IPO | Arm | Global
Introduction: Arm began seeking an IPO plan after being unsuccessful in its acquisition by Nvidia. If it goes public, the company will also become the largest IPO in the world this year and is expected to revive the sluggish global IPO market.
ARM, a chip design company under SoftBank, officially submitted its IPO application to the US Securities and Exchange Commission on Monday local time. If everything goes smoothly, Arm will be listed on NASDAQ next month.
After the unsuccessful acquisition by Nvidia, Arm began seeking an IPO plan. If it goes public, the company will also become the largest IPO in the world this year, with the potential to revive the sluggish global IPO market.
According to Reuters, SoftBank plans to sell about 10% of Arm's shares in its IPO and seek a valuation of $60 billion to $70 billion; The report also stated that multiple technology companies such as Apple, Amazon, and Nvidia are considering becoming cornerstone investors in Arm's IPO, but Arm has not responded to this to First Financial reporters.
Arm also hopes to enter fields such as AI and cloud computing to achieve growth, although the results of this effort are not yet clear.
According to the latest IPO documents disclosed by Arm, in the fiscal year ending March 31 this year, Arm's sales decreased by 1% to $2.68 billion, mainly due to the decline in global smartphone shipments. Arm's quarterly sales as of June 30 decreased by 2.5% to $675 million.
Arm stated that over 30 billion chips shipped globally in the fiscal year 2023 included Arm's technology. More than 50% of Arm's technology licensing fee revenue comes from smartphones and consumer electronics products. As the global smartphone market growth may fall to its lowest point in a decade, Arm's revenue model is also facing challenges. But Arm stated that the new technology may generate higher licensing fees on each chip.
It is worth noting that 24% of Arm's revenue in the past fiscal year came from China. Anmou Technology is Arm's largest customer and also the entire source of revenue for Arm China. Anmou Technology is independent of Arm, which indirectly holds only 4.8% of its shares.
Arm predicts that with the implementation of export controls by the US and UK governments, technology licensing fees in China may further decrease in the future.
Arm chip design has begun to be used on self-developed chips by technology giants such as Apple and Amazon. In addition, Arm technology also occupies about 10% of the global market share in the cloud computing field. Arm architecture chips are mainly used for CPUs in networks and data center servers.
Driven by the global trend of artificial intelligence, the growth prospects of global data centers are promising. However, the industry has questioned whether Arm is still on the edge of data centers and has not entered the core market. The huge demand for data processing in machine learning has led to a surge in sales of accelerated data processors such as GPUs and network chips. Although Nvidia's GPUs need to be combined with Arm CPUs, for example, Nvidia's latest "supercomputer" GH200 includes a CPU based on Arm architecture.
However, the industry believes that Arm technology has only played an auxiliary role in managing data processing and transmission functions. "To some extent, Arm can ride NVIDIA's' ride ', but not all NVIDIA GPUs must be sold together with Arm's CPU," said Rolf Bulk, an analyst at research firm New Street Research, in a report. He believes that the real opportunity for Arm still lies in the shift of artificial intelligence and machine learning from centralized cloud servers to devices used by end-users, such as smartphones, household appliances, and mechanical components.
Gartner analyst Sheng Linghai also told First Financial reporters, "Arm does not have a GPU to accelerate AI, and has not benefited much from this wave of AI."
In response, Arm emphasized in the IPO document that its technology remains crucial for artificial intelligence applications. Arm said, "The CPU is crucial in all artificial intelligence systems, whether it is fully handling AI workloads or working in conjunction with processors such as GPUs or NPUs."
Sun Zhengyi, Chairman and CEO of SoftBank Group, told investors in June this year that "Arm will achieve exponential growth due to the booming development of artificial intelligence. Arm's technology is the core of AI related companies and can generate synergies." He also stated that more than 85% of SoftBank's assets are related to the field of artificial intelligence, and Arm will play an important role in inventions and creations such as ChatGPT.
However, Arm's IPO documents did not provide any further details or clues about Arm's artificial intelligence strategy. "OpenAI has launched a tool that can use large language models to create content, mainly based on software and platforms, and Arm has nothing to do with it," said Kirk Boodry, an analyst at Astris Japan, a consulting firm. Boodry's valuation of Arm is approximately $47 billion.
