British chip designer Arm valued at $53 billion ahead of New York IPO

Paul Godfrey
·2 min read
UPI
Microchips designed by Arm, whose shares are set to float on the Nasdaq stock exchange in New York on Thursday, are used in smart devices from Apple iPhones to laptops and increasingly AI. File photo by Keizo Mori/UPI

Sept. 14 (UPI) -- Shares of British microchip designer Arm will float on the NASDAQ exchange at $51, valuing the company at $53.2 billion, when its initial public offering goes live Thursday in New York in the biggest tech offering of 2023.

The sale by Japanese tech investor Softbank of about 10% of the firm whose chips are used by Apple, Google, Samsung and Nvidia and many other leading names in devices from notebook computers, TVs, cars and smartphones, will net Arm an estimated $4.9 billion.

All four of the tech giants have pledged to buy the IPO which values Arm at 103 times its earnings of $524 million in the fiscal year that ended March 31, making it the second most valuable chip company after Nvidia.

Nvidia is valued at 108 times earnings but that is based on a forecast by Arm's Santa Clara, Calif.,-based rival that its third-quarter revenue will grow by $2.5 billion to $16 billion on surging demand for AI chips.

SoftBank has granted the flotation's underwriters -- a consortium of 28 banks led by Barclays, Goldman Sachs, JP Morgan and Japan's Mizuho -- an option to purchase up to an additional 7 million ADSs to cover over-allotments with the IPO expected to close Monday, Arm said in a news release.

The Cambridge-based firm's stock, which has been given the ticker symbol "ARM", will trade as American Depository Shares which provides U.S. investors ease of access to foreign companies but entails currency risk as well.

In its SEC filing in August, Arm warned it faced "intense competition and could lose market share to our competitors" explaining that its revenue stream was largely dependent on how much other companies adopt its technology.

The company also cited a range of risk factors that could impact its value from supply-side constraints to "adverse development in the economic and political conditions" of the regions in which it operates.