The issue price was fixed at USD 51.- while the market was expecting, given the 12x oversubscription, a price outside the range price, i.e. at USD 52.-. Given this, the company valuation is at $54.5 billion. ARM’s IPO is the fifth-largest operation in the tech sector, behind behemoths such as Facebook and Uber. The British company, which preferred the American Nasdaq to the London Stock Exchange, a clear sign that US investors are keener on AI opportunities than their European counterparts.
SoftBank took ARM private in 2015 at a valuation of $32 billion, hence the performance (+70.3%) is somehow disappointing as Arm’s business has fared better than the broader chip industry because it licenses designs rather than paying to make processing systems itself. Its technology has become ubiquitous in smartphones and data centers, delivering lucrative royalty payments.
The ARM brand may not be well known to the general public, but its chip architectures are behind the creation of 250 billion microprocessors found everywhere: in cell phones, personal computers, servers, televisions, cameras, games consoles, cars… In 2023, Arm Holdings Limited provided its customers with the technology needed to manufacture 30 billion chips. And like other players, it is benefiting from the insatiable demand for computing power resulting from the surge in artificial intelligence (AI). This demand concerns all ranges of microprocessors: from the $40,000 Nvidia chip needed to train AI models to specialized processors.
Yet demand for smartphones has weakened, weighing on Arm’s earnings. Investors have also scrutinized Arm’s exposure to China, given geopolitical tensions with the United States that have led to a race to secure chip supplies.