Arm Courts Intel as Anchor Investor in Upcoming IPO

[Daniel Nenni]

- SoftBank-backed Arm is in talks with Intel, other companies
-Arm is seeking to raise as much as $10 billion in IPO

• Arm Ltd., the chip designer backed by SoftBank Group Corp., is in talks with potential strategic investors including Intel Corp. to anchor what will be one of the largest initial public offerings of the year, people familiar with the matter said.
  
  UK-based Arm has held talks with other companies about participating in the IPO, according to the people, who asked not to be identified discussing confidential information.
  
  Talks are in the early stages and could still fall apart ahead of the listing, they said. It’s also unclear how much would be invested in Arm, or what the structure would be. Representatives for Intel and Arm declined to comment.
  
  Shares in SoftBank rose as much as 7.7% in Tokyo on Tuesday. Intel shares were up less than 1% Tuesday morning in New York.
  
  Arm is looking to raise as much as $10 billion in a New York listing later this year, having rejected repeated appeals from UK prime ministers to tempt the home-grown technology giant back to London, where it once traded. The lure of higher tech valuations and a deeper investor base in the US ultimately won out for Arm, which is expected to list on the Nasdaq exchange.
• 
  
• Bringing on an anchor investor can help drum up interest and momentum in an IPO, especially in a rough market for new listings. If the talks succeed, Intel would eventually be listed in Arm’s IPO prospectus ahead of the listing.
  
  Anchor investors buying $100 million to $200 million worth of shares have been popular for semiconductor-related IPOs in recent years. Growth equity firm General Atlantic invested about $100 million in Intel-backed Mobileye Global Inc.’s IPO last year while Qualcomm Inc. backed GlobalFoundries Inc.’s listing in 2021.
  
  A key part of Intel Chief Executive Officer Pat Gelsinger’s push to return the company to the pinnacle of the semiconductor industry is a plan to open up its factories to other firms, even rivals. If he’s to be successful in competing with Taiwan Semiconductor Manufacturing Co. in outsourced production, Intel will have to produce chips that contain Arm’s widely-used technology.
  
  The two have already announced a technical tie-up. Arm’s designs and industry-standard instruction set are used in everything from Broadcom Inc. networking chips to Apple Inc. processors in the iPhone and Macs to Qualcomm Inc.’s ubiquitous chips for mobile phones.
  
  By taking a position in Arm, whose technology has enabled direct competition for Intel’s processors, Gelsinger may be seeking to show his commitment to Arm and to embracing that openness. Throughout its more than 50-year history, Intel’s plants have almost exclusively worked on its own designs.
  
  “Intel’s talks to become a potential strategic investor in Arm’s upcoming IPO underlines the chip giant’s goal of becoming a key foundry for the fabless semiconductor sector and bringing back leading-edge manufacturing to the US,” said Bloomberg Intelligence analyst Kunjan Sobhani. “This is despite direct rivalry between Intel chips and Arm-based processors. It follows an Intel-Arm technical tie-up in April which, if combined with a strategic stake, could position Intel as a maker of chips designed on Arm architecture.”
  
  Gelsinger has launched an ambitious plan to regain Intel’s lead in the semiconductor industry by building new plants and rapidly improving its manufacturing technology. It’s an uphill battle as the main market for Intel’s products — personal computer processors — has slumped. And the company is losing market share to Nvidia Corp., which has leveraged its prowess in graphics processors used in video games to become the leader for artificial intelligence chips. Nvidia, which became the first chipmaker to cross the $1 trillion mark in valuation, first eclipsed Intel in market capitalization in 2020, and now the two companies aren’t even close.
  
  SoftBank founder Masayoshi Son has said he hopes the Arm IPO can be the largest ever by a chip company. Arm’s valuation still hasn’t been set and the company could be valued anywhere from $30 billion to $70 billion, Bloomberg News previously reported.
  
  Arm is a jewel of the UK technology industry. Its tech is found in most of the world’s smartphones and is pervasive across the electronics industry. The company is keeping its headquarters in Cambridge, England, for the time being and hasn’t ruled out the potential for a secondary listing in London down the road.

Arm Courts Intel as Anchor Investor in Upcoming IPO Bloomberg​

 

[Daniel Nenni]

I wonder what this is all about? Does Intel really have cash to burn on this? Arm is very close to TSMC and Samsung through customers. That is the strongest path forward.

 

[hist78]

I wonder what this is all about? Does Intel really have cash to burn on this? Arm is very close to TSMC and Samsung through customers. That is the strongest path forward.

We can treat it as a proactive measure by Intel if TSMC and Samsung are also involved in this IPO. Otherwise I don't see a strong reason why Intel needs to spend its precious cash on Arm. Arm can't give significant and preferential treatment to Intel because Intel is a shareholder. It can kill the trust of Arm's ecosystem.

 

[lilo777]

I wonder what this is all about? Does Intel really have cash to burn on this? Arm is very close to TSMC and Samsung through customers. That is the strongest path forward.

My impression was that the relationship between ARM and TSMC deteriorated somewhat recently. Something about developing ARM-related hard IP? Was it that ARM was not going to design ARM cores for TSMC anymore? I do not remember the details.

 

[farshid_adibi]

View attachment 1231

- SoftBank-backed Arm is in talks with Intel, other companies
-Arm is seeking to raise as much as $10 billion in IPO

• Arm Ltd., the chip designer backed by SoftBank Group Corp., is in talks with potential strategic investors including Intel Corp. to anchor what will be one of the largest initial public offerings of the year, people familiar with the matter said.
  
  UK-based Arm has held talks with other companies about participating in the IPO, according to the people, who asked not to be identified discussing confidential information.
  
  Talks are in the early stages and could still fall apart ahead of the listing, they said. It’s also unclear how much would be invested in Arm, or what the structure would be. Representatives for Intel and Arm declined to comment.
  
  Shares in SoftBank rose as much as 7.7% in Tokyo on Tuesday. Intel shares were up less than 1% Tuesday morning in New York.
  
  Arm is looking to raise as much as $10 billion in a New York listing later this year, having rejected repeated appeals from UK prime ministers to tempt the home-grown technology giant back to London, where it once traded. The lure of higher tech valuations and a deeper investor base in the US ultimately won out for Arm, which is expected to list on the Nasdaq exchange.
• 
  
• Bringing on an anchor investor can help drum up interest and momentum in an IPO, especially in a rough market for new listings. If the talks succeed, Intel would eventually be listed in Arm’s IPO prospectus ahead of the listing.
  
  Anchor investors buying $100 million to $200 million worth of shares have been popular for semiconductor-related IPOs in recent years. Growth equity firm General Atlantic invested about $100 million in Intel-backed Mobileye Global Inc.’s IPO last year while Qualcomm Inc. backed GlobalFoundries Inc.’s listing in 2021.
  
  A key part of Intel Chief Executive Officer Pat Gelsinger’s push to return the company to the pinnacle of the semiconductor industry is a plan to open up its factories to other firms, even rivals. If he’s to be successful in competing with Taiwan Semiconductor Manufacturing Co. in outsourced production, Intel will have to produce chips that contain Arm’s widely-used technology.
  
  The two have already announced a technical tie-up. Arm’s designs and industry-standard instruction set are used in everything from Broadcom Inc. networking chips to Apple Inc. processors in the iPhone and Macs to Qualcomm Inc.’s ubiquitous chips for mobile phones.
  
  By taking a position in Arm, whose technology has enabled direct competition for Intel’s processors, Gelsinger may be seeking to show his commitment to Arm and to embracing that openness. Throughout its more than 50-year history, Intel’s plants have almost exclusively worked on its own designs.
  
  “Intel’s talks to become a potential strategic investor in Arm’s upcoming IPO underlines the chip giant’s goal of becoming a key foundry for the fabless semiconductor sector and bringing back leading-edge manufacturing to the US,” said Bloomberg Intelligence analyst Kunjan Sobhani. “This is despite direct rivalry between Intel chips and Arm-based processors. It follows an Intel-Arm technical tie-up in April which, if combined with a strategic stake, could position Intel as a maker of chips designed on Arm architecture.”
  
  Gelsinger has launched an ambitious plan to regain Intel’s lead in the semiconductor industry by building new plants and rapidly improving its manufacturing technology. It’s an uphill battle as the main market for Intel’s products — personal computer processors — has slumped. And the company is losing market share to Nvidia Corp., which has leveraged its prowess in graphics processors used in video games to become the leader for artificial intelligence chips. Nvidia, which became the first chipmaker to cross the $1 trillion mark in valuation, first eclipsed Intel in market capitalization in 2020, and now the two companies aren’t even close.
  
  SoftBank founder Masayoshi Son has said he hopes the Arm IPO can be the largest ever by a chip company. Arm’s valuation still hasn’t been set and the company could be valued anywhere from $30 billion to $70 billion, Bloomberg News previously reported.
  
  Arm is a jewel of the UK technology industry. Its tech is found in most of the world’s smartphones and is pervasive across the electronics industry. The company is keeping its headquarters in Cambridge, England, for the time being and hasn’t ruled out the potential for a secondary listing in London down the road.

Arm Courts Intel as Anchor Investor in Upcoming IPO Bloomberg​

I makes much more sense for Apple to invest in ARM since all of their design now use the ARM architecture. And wasn't NVIDIA interested in buying ARM a couple of years ago, why wouldn't they step up? For Intel to Invest doesn't make much sense unless they are just trying to stay competitive with TSMC and Samsung.

 

[ta152h]

It seems like people might be exaggerating what this means, at least with what we know now.

An anchor investor doesn't have to be a company with a huge stake in the company. They aren't buying 80% of the company. $100 million is peanuts to Intel, and would represent a very minor stake in ARM. It's not an earth moving event that boggles the mind. It's probably quite minor. Now, if they say Intel is buying $4 billion worth of shares, that's different, but there's almost no possibility of that.

Intel often invests in companies and then sells those interests when they feel appropriate.

And if anything, it will help Intel's reputation, as it will show they are open to ARM and trying to be an independent fab, not married to x86, and willing to work with all partners. It's a good look, not a bad one.

It's good for ARM to have strong anchor investors, and I think it's a good look for Intel, but I just have a difficult time thinking this is some strategic pivot point for the company, and they are using this to somehow offset other fab makers. They already did that with ARM a few months ago, if they did it at all. Investing a few hundred million (which apparently is the max they are rumored to be considering) wouldn't get them even 2% of the company. Until there's something to indicate otherwise, I'm not convinced it's the big event everyone is seeing.

 

[Daniel Nenni]

My impression was that the relationship between ARM and TSMC deteriorated somewhat recently. Something about developing ARM-related hard IP? Was it that ARM was not going to design ARM cores for TSMC anymore? I do not remember the details.

I had not heard that in years, since the Intel Atom debacle. I remember when Intel, TSMC, and Samsung invested in ASML. Did it give anyone an advantage? No. It did get them a nice ROI based on ASML stock prices. Maybe Intel will make some money? Maybe it is an Intel head fake?

Sorry, nobody in the semiconductor ecosystem can afford to be enemies with TSMC. Especially not with the huge customer surge of N3. It is just not prudent.

 

[ta152h]

I had not heard that in years, since the Intel Atom debacle. I remember when Intel, TSMC, and Samsung invested in ASML. Did it give anyone an advantage? No. It did get them a nice ROI based on ASML stock prices. Maybe Intel will make some money? Maybe it is an Intel head fake?

Sorry, nobody in the semiconductor ecosystem can afford to be enemies with TSMC. Especially not with the huge customer surge of N3. It is just not prudent.

I'm not sure anyone wants to be enemies of ARM either.

The whole thing makes for good articles, but I have to believe the people in charge are mature enough not to let their emotions get the best of them. Of course ARM wants Intel and Samsung to be competitive, but that's a rational choice that benefits the company. And I think both TSMC and ARM realize they have better be able to work with each other, because they have a lot of mutual customers that depend on both of them.

Petty fighting doesn't figure into success that often. Strong, mutually advantageous relationships do.

 

[Barnsley]

Masayoshi San .... hasnt a lot of his recent speculative punts on companies been setting money on fire?

So why wouldnt he try and whip up some pub to try and bump this up to get some of that cash burn back?

 

[hist78]

It seems like people might be exaggerating what this means, at least with what we know now.

An anchor investor doesn't have to be a company with a huge stake in the company. They aren't buying 80% of the company. $100 million is peanuts to Intel, and would represent a very minor stake in ARM. It's not an earth moving event that boggles the mind. It's probably quite minor. Now, if they say Intel is buying $4 billion worth of shares, that's different, but there's almost no possibility of that.

Intel often invests in companies and then sells those interests when they feel appropriate.

And if anything, it will help Intel's reputation, as it will show they are open to ARM and trying to be an independent fab, not married to x86, and willing to work with all partners. It's a good look, not a bad one.

It's good for ARM to have strong anchor investors, and I think it's a good look for Intel, but I just have a difficult time thinking this is some strategic pivot point for the company, and they are using this to somehow offset other fab makers. They already did that with ARM a few months ago, if they did it at all. Investing a few hundred million (which apparently is the max they are rumored to be considering) wouldn't get them even 2% of the company. Until there's something to indicate otherwise, I'm not convinced it's the big event everyone is seeing.

"$100 million is peanuts to Intel"

It's not totally true for today's Intel. Intel's financial situation, such as the free cash flow, is deteriorating quickly. Intel must spend each dollar very carefully.

Intel Free Cash Flow - TTM ($mil)

Date Value

03/31/2023 -$19,909.00

12/31/2022 -$9,617.00

09/30/2022 -$13,456.00

06/30/2022 -$1,728.00

03/31/2022 $9,596.00


Source:

Intel (INTC) Free Cash Flow (TTM) - Zacks.com

Free Cash Flow (TTM) is a widely used stock evaluation measure. Find the latest Free Cash Flow (TTM) for Intel (INTC)

www.zacks.com

 

[chillfire]

Rumor is about $10 B investment, not a peanuts at all. I am guessing intel may cancel or drastically scale down planned German fab then it has money to invest on ARM. I feel it is a good thing for intel that German refused to increase the subsidies. In the manufacturing business, east Asia is the most cost competitive area and I think Europe is the worst.

 

[ta152h]

"$100 million is peanuts to Intel"

It's not totally true for today's Intel. Intel's financial situation, such as the free cash flow, is deteriorating quickly. Intel must spend each dollar very carefully.

Intel Free Cash Flow - TTM ($mil)

Date Value

03/31/2023 -$19,909.00

12/31/2022 -$9,617.00

09/30/2022 -$13,456.00

06/30/2022 -$1,728.00

03/31/2022 $9,596.00


Source:

Intel (INTC) Free Cash Flow (TTM) - Zacks.com

Free Cash Flow (TTM) is a widely used stock evaluation measure. Find the latest Free Cash Flow (TTM) for Intel (INTC)

www.zacks.com

Did you notice how little $100 is next to all those numbers? On top of this, they sold more Mobileye, for I believe 3.5 billion. They have a perfect credit rating, and the PC market has apparently bottomed out.

100 million next to 19B? Not much. And if you think of how many other expenses they have, and their income that offset a big part of those expenses, $100 million is almost trivial for an investment. Plus, it's not like they're throwing it away, normally they buy and sell these investments when they see an opportunity to make money. As an investment, it's an easy one to make.

 

[ta152h]

Rumor is about $10 B investment, not a peanuts at all. I am guessing intel may cancel or drastically scale down planned German fab then it has money to invest on ARM. I feel it is a good thing for intel that German refused to increase the subsidies. In the manufacturing business, east Asia is the most cost competitive area and I think Europe is the worst.Ru

The $10 Billion number is for the entire IPO, not Intel's stake in it. Intel's stake is rumored to be much, much lower.

 

[Mooredaddy]

The $10 Billion number is for the entire IPO, not Intel's stake in it. Intel's stake is rumored to be much, much lower.

Yeah the headlines seemed to be intentionally misleading

 

[hist78]

Arm in talks with big clients about investing in IPO

"June 12 (Reuters) - SoftBank Group Corp's (9984.T) Arm is in talks with some of its biggest customers and end users about bringing on one or more anchor investors in the chip designer's initial public offering (IPO), two sources familiar with the matter said.

Arm is talking to at least ten companies, including Intel Corp (INTC.O), Alphabet Inc (GOOGL.O), Apple Inc.(AAPL.O), Microsoft Corp.(MSFT.O), TSMC (2330.TW), and Samsung Electronics Co Ltd.(005930.KS), about their potential participation in the IPO, one of the sources said."

Arm in talks with big clients about investing in IPO

SoftBank Group Corp's Arm is in talks with some of its biggest customers and end users about bringing on one or more anchor investors in the chip designer's initial public offering (IPO), two sources familiar with the matter said.

www.reuters.com

 

[hist78]

Arm in talks with big clients about investing in IPO

"June 12 (Reuters) - SoftBank Group Corp's (9984.T) Arm is in talks with some of its biggest customers and end users about bringing on one or more anchor investors in the chip designer's initial public offering (IPO), two sources familiar with the matter said.

Arm is talking to at least ten companies, including Intel Corp (INTC.O), Alphabet Inc (GOOGL.O), Apple Inc.(AAPL.O), Microsoft Corp.(MSFT.O), TSMC (2330.TW), and Samsung Electronics Co Ltd.(005930.KS), about their potential participation in the IPO, one of the sources said."

Arm in talks with big clients about investing in IPO

SoftBank Group Corp's Arm is in talks with some of its biggest customers and end users about bringing on one or more anchor investors in the chip designer's initial public offering (IPO), two sources familiar with the matter said.

www.reuters.com

I am not sure it's a good sign or a bad indication about Arm's IPO.

 

[ta152h]

I am not sure it's a good sign or a bad indication about Arm's IPO.

Doesn't it make sense for them to try to find big anchor investors, to boost up the price a little and validate the price they want at the IPO?

I'm not that knowledgeable about this stuff, so I'm not sure, but it looks like it's just them being prudent and doing what they can to make the IPO go smoothly and get the most out of it.

I don't really see a downside to it, but I might be missing something.