Largest IPO of the year: chip developer Arm is said to be worth more than $ 60 billion

The chip designer Arm, whose technology can be found in almost all smartphones, has made its IPO official. The company, which belongs to the Japanese technology group Softbank, published its stock market prospectus on Monday.

The document initially gave no information on the volume and price of the stock placement on the Nasdaq technology exchange. However, it is expected to be the largest IPO of the year in the US.

The stock market prospectus shows, among other things, that the poor business generates stable profits. In its most recent fiscal year ending March, Arm made a profit of $524 million on sales of about $2.68 billion. In the prior fiscal year, it posted earnings of $549 million on sales of approximately $2.7 billion.

Chip architecture for Apple and Samsung

Apple and Samsung, among others, develop the processors for their smartphones based on the chip architectures designed by Arm. The semiconductor company Qualcomm, whose chips run many Android devices, also uses it. The companies pay royalties to Arm for using the chip architectures.

The arm designs prevailed against Intel chip systems in smartphones and tablet computers – in part because they use less power. Now chips based on Arm architectures are also used in data centers, and Apple uses them in its Mac computers.

Chinese business important

In terms of risk factors, Arm has put a lot of emphasis on doing business in China in its prospectus. A quarter of ARM’s revenue came from the world’s largest smartphone market last year. The licenses for Arm’s chip designs are sold there by the company Arm China, in which Chinese investors have a majority of 52 percent.

Arm only owns 10 percent of Softbank’s subsidiary, which controls the rest of the shares. Arm sees risks for the company, both in this structure and in the technology competition between Beijing and Washington. Some high-performance ARM chips are already being hit by US export restrictions to China.

Bought for $32 billion in 2016

Softbank bought the British company Arm in 2016 for $ 32 billion and delisted it. A sale to chip group Nvidia fell through last year over concerns from competition watchdogs and gun customers. Then it was decided to go public. Softbank intends to retain a controlling interest in Arm after the share placement.

According to information from the financial service Bloomberg, Softbank was considering a $60 billion to $70 billion total valuation for Arm for the IPO. Originally targeting $8 to $10 billion in revenue, revenue could be lower as Softbank seeks to maintain a larger stake, the report said.

(oli/sda/dpa)