Arm Holdings Plc’s Blockbuster IPO: Reshaping the Chip Industry

Arm’s Listing and Its Impact on Tech Startup

3 min readSep 13, 2023

In a momentous financial event, Arm Holdings Plc, a prominent chip designer owned by SoftBank Group Corp., has priced its initial public offering (IPO) at the upper end of its projected range, successfully raising a staggering $4.87 billion. This impressive feat marks the largest IPO of the year, with the potential to breathe new life into equity markets. Arm’s journey from private ownership to a public listing is poised to have significant implications for the technology sector and beyond.

Key Points:

- Arm Holdings Plc has priced its IPO at $51 per share, raising $4.87 billion and garnering a market valuation of approximately $54.5 billion.

- Despite an initial target of $8 billion to $10 billion, Arm’s IPO size was scaled back, as SoftBank Group Corp. decided to retain a substantial stake in the company, retaining about 90% of its shares post-IPO.

The Genesis of Arm Holdings Plc

Arm Holdings Plc, a pivotal player in the global chip supply chain, is responsible for designing semiconductors that power the majority of smartphones worldwide. Founded in 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology, Arm enjoyed a stint as a publicly traded company from 1998 until 2016 when SoftBank acquired it for a monumental $32 billion. This acquisition was pivotal in transforming Arm’s business model and expanding its reach within the technology industry.

The SoftBank Influence

SoftBank’s strategic vision has played a substantial role in Arm’s journey to becoming a public entity once again. After acquiring Arm seven years ago, SoftBank’s influence and investment helped Arm grow and adapt to a rapidly evolving tech landscape. However, the decision to go public was not straightforward, as SoftBank initially sought to sell Arm to Nvidia in a $40 billion deal. Regulatory hurdles and opposition from Arm’s customers thwarted this effort, leading SoftBank to chart a course toward an IPO.

The Significance of Arm’s IPO

1. Industry Catalyst: Arm’s IPO, as the world’s largest in 2023, could serve as a catalyst for other tech startups and companies planning to go public in the United States. This momentous event might reinvigorate a sluggish IPO market, which has experienced its most prolonged drought since the 2009 financial crisis.

2. The Pursuit of Advanced Computing: Arm’s strategic pivot under the leadership of CEO Rene Haas involves diversifying beyond the smartphone market. With a focus on advanced computing, particularly chips for data centers and AI applications, Arm aims to capitalize on the growing demand for artificial intelligence chips and generative AI.

Arm’s Vision for the Future

As the technology landscape continues to evolve, Arm aims to remain at the forefront by enabling companies to design and utilize microprocessors efficiently. Its technology, recognized for its power efficiency, is integral to the success of smartphones, where battery life is paramount. The company’s CEO, Rene Haas, is keen on expanding into high-margin markets, such as data centers and AI applications, where processors are in high demand and promise substantial profitability.

Facing Industry Challenges

Despite its illustrious history, Arm is not immune to the challenges that the semiconductor industry faces. The sector has been grappling with a sales slump exacerbated by an oversupply of inventory. Arm’s revenue declined approximately 1% to $2.68 billion for the fiscal year ending March 31. However, the company remains resilient, with a net income of $524 million, despite a dip from the previous year.

In conclusion, Arm Holdings Plc’s blockbuster IPO represents a pivotal moment for the tech industry and financial markets at large. As SoftBank’s vision comes to fruition, Arm is poised to play a significant role in shaping the future of chip design and artificial intelligence. Its journey from private ownership to public listing symbolizes the relentless pursuit of innovation and adaptation in an ever-changing technological landscape. Arm’s IPO, the largest of the year, could potentially be the spark that ignites a resurgence in the IPO market and opens doors for other technology-focused companies to follow suit.

- Nate Ostrowski

The Ostrowski Agency