It is now official. The British electronic chip giant, ARM, chose New York for its IPO scheduled for this year. Highly anticipated, this IPO could nevertheless be affected by the Chinese division of the company.
Failure of British rulers
Since the abortive takeover of ARM by Nvidia, SoftBank, which acquired it in 2016 for $32 billion, has been trying to take it public at all costs. The Japanese conglomerate, and particularly its leader, Masayoshi Son, are betting a lot on this event ; while the company has been accumulating losses for several months, Son owes the latter more than $5 billion.
If an IPO was not the shadow of a doubt, it was still necessary to determine where it would take place. ARM has favored New York from the start, but British executives are pushing to keep their business at home by listing it on the London Stock Exchange (LSE) through dual listing simultaneously in New York and London, an option rarely favored because it is expensive and complex.
She was ultimately not accepted. According to South China Morning PostARM chose New York. The company does not rule out a possible IPO, however, on time “, in Londonbut prefers to focus on the United States for now. ARM will still keep its headquarters in Cambridgein England.
A valuation oscillating between 30 and 70 billion dollars
SoftBank is set to appoint banks to lead the transaction, notamment Goldman Sachs, JPMorgan Chase et Barclays. The objective is to set the price of the IPO at the end of the summer and finalize the offer during the course of the year. On several occasions, SoftBank reiterated the urgency of the situation, wishing to complete the IPO as soon as possible.
ARM is a fundamental player in the processor sector. Its architecture is used by many players in the industry and equips 95% of smartphones in the world. Logically, its listing on the stock exchange should be notable, with investment banks offering a wide range of valuations, ranging from $30 billion to $70 billion.
For its part, SoftBank claimed in 2022 to aim for a valuation of at least 60 billion dollars. Masayoshi Son wants ARM’s IPO to be “ the most important in the history of the semiconductor industry.
ARM’s Chinese unit could spoil the party
If the place of listing has finally been chosen, there is still a long way to go to achieve it. In effect, ARM’s Chinese division has been delaying the company’s plan to get rid of its local joint venture since last May. According to Financial Times, the Chinese authorities refuse to process the documents confirming the transfer of ARM China to a new entity. Beijing would also be determined to keep the British chip designer as the main shareholder of the unit.
The ARM architecture is the most prevalent in mobile devices in China, which explains this decision, especially since the United States has drastically tightened its restrictions against the country when it comes to semiconductors. If the Middle Kingdom invests and progresses to design its own chips, US sanctions are hitting his businesses hard at the moment.
If the Chinese authorities continue to obstruct ARM’s efforts, this could delay the firm’s long-awaited IPO in the United States and, therefore, worsen the already worrisome situation SoftBank finds itself in.
