Arm is reportedly negotiating with potential investors, including Intel. The discussions are in the early stages and could dissolve before the listing. Details regarding the extent of the investments and the deal’s structure still need to be clarified. Intel and Arm declined to comment on the matter when approached for statements.
The news of these talks has sparked investor enthusiasm, resulting in a surge in SoftBank’s shares by as much as 7.7% in Tokyo on Tuesday. Arm aims to raise as much as $10 billion through a New York listing later this year. This is despite repeated appeals from UK politicians to lure the technology giant back to London, its former trading hub.
Ultimately, the allure of higher tech valuations and a more extensive investor base in the US seems to have prevailed for Arm, which is anticipated to list on the Nasdaq exchange.
An anchor investor
Bringing on an anchor investor, such as Intel, can significantly bolster interest and momentum in an IPO, particularly in a challenging market for new listings. Anchor investors typically inject substantial sums ranging from $100 million to $200 million in semiconductor-related IPOs.
For instance, General Atlantic invested approximately $100 million in Intel-backed Mobileye Global’s IPO last year, while Qualcomm supported GlobalFoundries’s listing in 2021. Intel’s CEO, Pat Gelsinger, sees enabling access to the company’s factories for other firms, including rivals, as a pivotal element in reestablishing Intel’s prominence in the semiconductor industry.
To effectively compete with Taiwan Semiconductor Manufacturing Company in outsourced production, Intel must manufacture chips incorporating Arm’s widely-used technology. Already, Intel and Arm have announced a technical collaboration.
A heavyweight in the industry
Arm’s designs and its industry-standard instruction set find applications in various products, ranging from networking chips by Broadcom to Apple’s processors in iPhones and Macs and Qualcomm’s ubiquitous mobile phone chips.
By establishing a position in Arm, a company whose technology has facilitated direct competition for Intel’s processors, Gelsinger may be aiming to demonstrate his commitment to Arm and his embrace of openness. Throughout its 50-year history, Intel’s plants have primarily focused on their own designs.
SoftBank founder Masayoshi Son envisions the Arm IPO as the largest ever by a chip company. However, the exact valuation for Arm remains undetermined, with estimates ranging from $30 billion to $70 billion, according to a Bloomberg report.
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