Ahead of its IPO, ARM’s revenues took a hit from the global smartphone slow-down
Chip design powerhouse Arm has filed for a long-anticipated initial public offering in the United States.
The initial filing with the Securities and Exchange Commission offered little in the way of detail on how the IPO would be priced and Arm’s expected valuation or the percentage of the company that it would be offering for sale; those have yet to be determined, the company said. Reuters has reported that Softbank, which bought the British company in 2016 for $32 billion, is planning to sell about 10% of Arm’s shares in the IPO and seek a valuation of between $60 billion and $70 billion for the company. Shares are planned to trade on the Nasdaq under the ticker symbol ARM.
Declaring itself the “foundation of the semiconductor industry,” Arm said in its SEC filing that more than 250 billion Arm-based chips have shipped since the company’s inception and that 30.6 billion Arm-based chips shipped in its fiscal year 2023.
“Today, Arm CPUs run the vast majority of the world’s software, including the operating systems and applications for smartphones, tablets and personal computers, data centers and networking equipment, and vehicles, as well as the embedded operating systems in devices such as smartwatches, thermostats, drones and industrial robotics,” the company said in its IPO filing. “We estimate that approximately 70% of the world’s population uses Arm-based products, and the scale of Arm’s reach continues to expand, with more than 30 billion Arm-based chips reported as shipped in the fiscal year ended March 31, 2023 alone, representing an approximately 70% increase since the fiscal year ended March 31, 2016.”
Softbank sold about 25% of Arm to the Softbank Vision Fund in 2017 for $8 billion and recently repurchased that stake, Reuters has reported. While Arm’s F-1 filing offered no details on ownership structure or percentages, it did say that it would still be a “controlled company” under Softbank.
Softbank revealed the news of the IPO as it also reported its current financial results, which showed that Arm has been impacted by the global smartphone slowdown. Softbank said that for its Arm segment, net sales were down nearly 11% year-over-year on a U.S.-dollar basis, due to “inventory correction and a slowdown in consumer spending.” Royalty revenue for Arm was down more than 19% due to slower sales of Arm-based chips in the smartphone and consumer home IoT markets, partially offset by growth in chips for cloud server and automotive applications. However, Softbank said that licensing and other revenues were up 3.6% as Arm signed “major deals with companies developing chips for future smartphone, automotive, embedded, and AI applications.” Softbank also reported that Arm’s expenses have been higher because it is increasing its research and development investments ahead of its IPO, to be ready to meet future technology needs of its customers.
