According to Reuters news on March 24, SoftBank Group plans to promote its chip design company Arm to conduct an initial public offering at a valuation of $60 billion. Previously, SoftBank had once planned to sell Arm to Nvidia for $40 billion. However, due to antitrust investigations in the United States and Europe, the transaction was eventually aborted, and SoftBank then began Arm's IPO plan.
Goldman Sachs or general investment, arm can meet softbank's "big appetite"
According to people familiar with the matter, SoftBank plans to select Goldman Sachs Group as the lead underwriter of Arm's initial public offering. If that news comes true, it could hopefully bring Arm's valuation to $60 billion. After the failure of the sale of Nvidia, SoftBank began to promote Arm's IPO process, and the preparation for the IPO has been basically completed.
SoftBank said Arm will complete its IPO by March 2023. Previously, the New York Stock Exchange and the London Stock Exchange had a period of competition for the location of Arm's listing. According to sources, Arm will be more likely to be listed on the NASDAQ in the United States.
Separately, in the past few weeks, SoftBank has visited a number of investment banks about Arm's IPO plans and asked them to take the lead in loan transactions for Arm, according to sources.
It is likely that the banks that handle the loans will play a major role in the IPO, but the investment lineup of the IPO has not yet been finalized, and more banks may join in addition to Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group.
SoftBank, Arm, Goldman Sachs, JPMorgan Chase and Mizuho all declined to comment on the news.
Selling his body failed, reason returned, arm laid off people and broke his arm to survive
In September 2020, Nvidia announced that it would acquire Arm for $40 billion, and on February 7, 2022, SoftBank and Nvidia jointly issued a statement saying that Nvidia's acquisition of Arm had failed.
The reason for the failure of this transaction is mainly that national regulators in the United States and Europe are very sensitive to the transaction, fearing that the completion of the transaction will damage Arm's independence and hit the innovation.
On December 2, 2021, the U.S. Federal Trade Commission (FTC) announced a lawsuit to block Nvidia's acquisition of Arm, citing as many as 120 allegations against the acquisition.
Although Nvidia aggressively defended the allegations, it still did not work, and the largest merger in the semiconductor industry ended with Arm retaining an advance payment of 1.25 billion, and the Nvidia acquisition failed.
After the failure of "selling" Nvidia, although intel and other companies still expressed interest in acquiring Arm, there was no specific action.
Arm then made layoffs on March 15. Arm's layoffs plan will affect about 12 to 15 percent of its workforce and will reach up to a thousand.
Analysts pointed out that Arm's layoffs are to streamline the size of the company, precisely for the upcoming listing plan. A person with more than two decades of experience in the semiconductor industry told Leifeng that Arm is essentially a "small and beautiful" company, which has become bloated in the past few years due to the forced ripening of capital, and the scale of the business has not kept up with the expansion of the company's scale. The person believes that Arm's layoffs are a manifestation of its rational return.
Arm's business has performed very well in recent years. Arm's net sales surged 40 percent to $2 billion in the nine months to December last year, a fairly strong increase due to high demand for chips.
And in addition to the traditional IP licensing business, Arm is also actively opening up new tracks. In the HPC (high performance computing) market, Arm already occupies a place. About five years ago, Arm acquired AllineaSoftware, a leading vendor of HPC software tools, to strengthen Arm's HPC software ecosystem support.
Today's HPC market customers are more concerned about cost, energy consumption, and these are Arm's strengths. There are already a number of upcoming HPC systems that are expected to mix Arm and X86 and other types of processors. It is estimated that Arm-based systems will occupy about 10% of the HPC market by 2025. This also indicates Arm's huge market potential after the completion of the IPO.