News & Analysis

UK microchip giant Arm make motion to sell shares in US

23rd August 2023
Kristian McCann

UK microchip designer Arm has filed to list its shares on the US Nasdaq stock market. The move, earmarked for September, has generated interest and ire from titans such as Amazon and even the UK Prime Minister (PM).

On Monday, the company announced it publicly filed a registration statement relating to a proposed Initial Public Offering (IPO), stating the number of shares and the price for them were yet to be determined. Despite this, analysts believe its IPO could be the biggest listing since late 2021.

An IPO is when a private company makes its shares available for public purchase before trading begins. This process allows the company to raise capital by selling ownership stakes to a wide range of investors, and even gain understanding of level of interest before trading begins and assign a value; the company is reportedly looking for a valuation of between $60 to $70 billion.

The company, whose chip designs are used by more than 500 clients including Apple, Samsung and Google, is reported to have been in discussion with Amazon to be an anchor investor in the IPO. Arm’s significance in Cloud computing may prove a point of interest from Amazon, as the company’s Cloud business, Amazon Web Services, already uses Arm’s designs for its own processing chip called Graviton.

This comes as a blow for the UK, as in March, the Cambridge-based company opted against listing shares in London, much to the ire of the UK PM Rishi Sunak, who met with them to persuade them otherwise. The firm said it did not plan to pursue a UK listing, saying the US was "the best path forward".

Arm was previously listed on both the London and New York stock market for 18 years. Its 2016 purchase by Japanese conglomerate Softbank for $32 billion saw the company become private, with later talks to float it centring around a US-only listing. Other major global technology companies including Google, Apple and Facebook trade on the Nasdaq.

Founded in 1990, Arm has been a coveted company of the UK's tech sector. Yet the company’s decision raised concerns that the UK market was not doing enough to attract tech company stock offerings. Arm's Chief Executive Rene Haas has said, however, the company will keep its material intellectual property, headquarters and operations in the UK.

The latest filing shows Softbank is pushing ahead with the multi-billion dollar float despite difficult conditions in the global financial markets. Arm's sales declined to $2.68 billion in the year ending 31st March, hurt by a slump in global smartphone shipments, but earlier in August, the company bought Vision Fund's stake in Arm at a reported valuation of $64 billion coinciding with news of the listing and IPO.

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