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British chip design firm Arm Holdings (ARM) updated its initial public offering filing on Tuesday and said it expects to price the offering which would value the company as much as $54B. Arm, which is owned by Japanese tech conglomerate SoftBank, said it expects to price 95.5M shares between $47 and $51 per share, according to the updated filing. Earlier this month, it was reported that Arm was looking at this range to price the offering at.
The price range would value Arm between $50B and $54B and would be below the $64B valuation at which SoftBank purchased the 25% portion of the company it didn't already own last month.
The company also confirmed that several major tech companies, including Apple, Google, AMD and Nvidia will become investors in the offering. The group, which also includes Intel , MediaTek, Samsung, Synopsys and Taiwan Semiconductor, have indicated an interest in "purchasing up to an aggregate of $735 million of the ADSs offered in this offering," Arm added.
Arm, which will trade under the symbol "ARM," generated $2.68B in revenue in fiscal 2023, down from $2.7B in fiscal 2022. Net income in its most recent fiscal year came in at $524M, down from $549M in the year ago period. It had $2.2B in cash and cash equivalents at the end of fiscal 2023, up from $1.64B in fiscal 2022. Arm was purchased by SoftBank in 2016 for $32B.
(Reuters) -SoftBank Group's Arm is seeking a valuation of more than $52 billion in its initial public offering, the chip designer said on Tuesday as it begins marketing for the biggest U.S. stock market flotation of the year. SoftBank is offering 95.5 million American depository shares of the...
I find it difficult to get excited about Arm. Except for architecture licenses, I don't see a bright future on their current flightpath. Perhaps I'm underestimating the potential IP license revenue from cloud company designs like AWS Graviton, which will likely keep using Arm-designed cores.
Does anyone know if Arm architecture licenses have a flat fee, or they do they include a per core or per chip revenue factor too?
I think it was a flat fee or something like that. But I remember hearing about how they were now trying to get a percentage of the sale price of the final product be it phone or SOC. Don't know how that will work with Apple or Nuvia where the license was basically for the concept of an ARM chip rather than any IP.
Arm licenses are a combination of flat fee and per core fees, with newer, high performance cores commanding a higher fee in general. It varies customer to customer, whether the customer has an architectural license vs reference chip designs, and the details get pretty complex.
I think it was a flat fee or something like that. But I remember hearing about how they were now trying to get a percentage of the sale price of the final product be it phone or SOC. Don't know how that will work with Apple or Nuvia where the license was basically for the concept of an ARM chip rather than any IP.
I know from experience it is per core for design IP, but architecture licenses are different. An architecture license is essentially just a license to use the Arm instruction set, and I have no experience with one.
If you´d ask me, I would assume Softbank is trying to cover up a bad investment through trickery. Softbank can artificially increase the share price by only releasing a small portion of the shares to the public. This will increase the value of their left-over share significantly. this will help to fix their own balance sheet.
Just looking at the numbers it is incredible to value the company at 20x its revenue or 100x its profits. Considering they have little to no influence on the amount of fee generating chips, they either have to cut cost or increase pricing to improve their profitability. Given the upcoming competition from RISC-V, either of those options will harm them in the long run.
Arm offers licensing packages from our technology portfolio for all customers—from startups to large enterprises, academia to OEMs and semiconductor companies.
www.arm.com
I'm curious about what's included in an Architecture License just because the definition is so elusive. I suspect there's more to it than just the instruction set.
