Investors and analysts have been waiting anxiously for weeks for the IPO of the British chip company Arm, which belongs to the Japanese Softbank. Now the time has come: Arm shares have been freely traded on the US technology exchange NASDAQ since Thursday.
• Arm shares are celebrating their stock market comeback on the NASDAQ
• Softbank subsidiary receives billions thanks to Arm IPO
• US tech giants are likely to invest in Arm
The stock market debut of the Arm share is the main topic on the international stock exchanges on Thursday, as the IPO of the British chip company is likely to be the largest IPO of 2023. The Arm share sparked enormous interest in the run-up to the IPO, so The shares were at times oversubscribed six times.
The high expectations for the Arm shares were completely fulfilled on their first day of trading: on the US stock exchange NASDAQ, the Arm shares ultimately rose to a level of 63.59 US dollars. This meant that the shares were 24.69 percent above their initial issue price of $51.00. The ARM shares opened at a price of $56.10.
Arm: A Softbank subsidiary since 2016
Arm is not an independent company in terms of its capital structure, but has been part of Softbank since 2016. The Japanese holding company shelled out $32 billion to take over the microprocessor licensing provider about seven years ago. As a result, Arm shares were delisted from both the London Stock Exchange and the NASDAQ. The US chip giant NVIDIA’s plan to take over Arm, announced in 2020, failed due to resistance from various competition authorities – most notably the US Federal Trade Commission (FTC) – which is why NVIDIA was forced to abandon the project in February 2022 to be shelved.
The NASDAQ IPO – strictly speaking it is a comeback – now represents an alternative for Softbank to significantly expand its cash reserves thanks to the valuable tech subsidiary. However, as of today, Thursday, only around nine percent of Arm’s share capital went into free trading; this corresponds to a number of 95.5 million shares. Accordingly, Arm’s IPO brought almost five billion US dollars into Softbank’s coffers, but the remaining 91 percent of Arm shares will remain in the holding company’s possession for the time being.
Why Arm is so important to the global electrical industry
Given the importance of the British company Arm, it is no wonder that the Arm IPO is on everyone’s lips. Arm does not produce its own integrated circuit chips (IC for short), but rather grants different licenses to semiconductor development companies and semiconductor manufacturers. The large number of licensees and significant advantages of the architecture – such as its low energy consumption despite high performance – ensure that Arm implementations are the most commonly used architecture in the embedded sector. Almost all current smartphones and tablet computers have licensed ARM processors, including Apple’s iPhones and most Android devices, such as those from Samsung.
Thanks to this extremely successful business concept, Arm generates stable profits. In the last fiscal year, which ended at the end of March 2023, Arm made a profit of $524 million on sales of $2.68 billion, according to its IPO prospectus, although Arm also suffered from the recent decline in demand for electronic chips . By 2025, the company expects a sales increase in the mid-range of 20 percent, as “Wall Street Online” writes.
Tech giants probably want to invest in Arm
The IPO is particularly exciting because Arm has fundamental importance for the entire chip sector. In order to prevent the competition from gaining a competitive advantage through a high share of Arm, numerous US tech giants such as NVIDIA, Apple, Alphabet, Amazon and QUALCOMM planned to invest between 25 and 100 million, as the “Manager Magazin ” writes, citing insider circles. Due to its pronounced neutrality, Arm is considered the “Switzerland of chips” – a position that the company is likely to maintain given the large number of major investors.
Editorial team finanzen.net
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