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ARM prepares to go public, raising $52B, and signs a long-term licensing deal with Apple

Chip design company ARM, known for its dominant architecture in mobile phones, is planning to go public with an IPO valued at around $52 billion. This move has attracted several tech firms, including Apple, AMD, Intel, NVIDIA, and Samsung, who will be buying shares in the offering. ARM’s IPO filing states that it intends to sell 95.5 million American Depository Receipts (ADRs) in the price range of $47 to $51 each.

Interestingly, Apple and ARM have signed a new contract for chip technology that extends beyond 2040, as revealed in the IPO filing. Apple will continue to license ARM’s chip architecture to design its A-series and M-series chips. The A-series chips power iPhones and basic iPad models, while the more advanced iPad tablets and Macs are equipped with M-series chips.

ARM’s architecture currently runs on 99% of the world’s smartphones, a testament to its widespread usage and success. Apple, one of the original founders of ARM back in 1990, initially integrated ARM processors in its Newton Personal Digital Assistant (PDA), despite the device’s failure. However, ARM’s energy-efficient capabilities propelled its architecture to dominate the mobile phone market.

Previously publicly traded on the London Stock Exchange and Nasdaq, ARM went private in 2016 when SoftBank acquired it for $32 billion. Now, SoftBank will remain the majority owner of ARM with a 90.6% stake after the IPO. Notably, SoftBank will not receive any proceeds from the public offering.

The ARM IPO faced significant obstacles when Nvidia attempted to acquire the company for $40 billion three years ago. However, the deal was opposed by Qualcomm and the FDA, leading to insurmountable regulatory hurdles.

As for individual investors hoping to purchase ARM shares at the IPO price, it might prove challenging given the high demand. It may be necessary to wait for the shares to commence trading before taking a position in ARM.

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