The biggest IPO this year! Shares opened up 10%.
The much-anticipated Arm IPO finally officially debuted on Thursday Eastern Time!
On the first day of the U.S. IPO, Arm opened up 10% to US$56.10, and the intraday increase reached about 30%. As of closing, Arm's share price rose 24.69% to US$63.59. Based on the closing price, the market value was US$65.248 billion. If including restricted stock units, Arm's fully diluted valuation is close to US$68 billion .
After the market closed on Wednesday, Arm set its IPO price at $51 per share, at the top of its guidance range of $47-$51 , valuing it at $54.5 billion.
The U.S. semiconductor market is very happy. Looking back at our GEM, we are in the battle to defend 2,000 points again . It’s really a tearful moment!
Many of Arm's major customers - including Apple, Nvidia, AMD, Google, Intel, MediaTek, TSMC, Synopsys, Cadence Design, Samsung Electronics, etc. - are cornerstone investors in this issuance. The IPO has more than $700 million in stock reserved for them.
In addition, Arm has reached a new long-term agreement with Apple that will extend Apple’s partnership using Arm architecture until 2040 .
01.
The rise of Arm semiconductor technology
Arm is a British company headquartered in Cambridge that was founded in the early 1990s. Although Arm does not directly produce chips , it has developed a low-power, high-performance processor architecture that is widely used in various devices such as smartphones, tablets, and Internet of Things devices . This architecture is adopted by many chip manufacturers, including well-known companies such as Apple, Samsung, and Qualcomm, making Arm one of the largest chip architecture licensing companies in the world.
There are two key factors behind Arm's success: first, its low-power architecture has huge market potential in the fields of mobile devices and the Internet of Things, and CPUs based on the Arm architecture account for more than 99% of mobile devices such as smartphones; second, Arm uses an open licensing model that allows other companies to license its technology and build their own chips on top of it. This model promotes innovation and makes the Arm architecture one of the most popular chip designs in the world.
Since its establishment, Arm-based chip shipments have exceeded 250 billion and are supported by more than 15 million software developers. There are R&D operation centers in North America, the United Kingdom, Europe, and the Asia-Pacific region.
02.
Behind the listing
Arm's decision to go public has sparked a flurry of speculation about why the company chose to go public. First, Arm's founders and management team may believe that by going public, the company will be better able to attract capital and talent to continue to expand its R&D and global operations. Second, going public will provide greater transparency, making it easier for investors to assess a company's value and potential.
However, one of the most compelling motivations may be Arm's strategic positioning. Arm occupies a key position in the global chip supply chain, and its architecture is widely used in various devices. By going public, Arm is expected to strengthen its position and further expand its influence in the semiconductor field.
Arm's successful listing and first-day surge were a much-needed victory for its owners, SoftBank and Masayoshi Son. After the IPO, SoftBank still holds approximately 90% of Arm’s shares. Thursday’s surge increased the value of SoftBank’s Arm shares by about $12 billion. Some analysts believe that Arm's listing will, on the one hand, provide SoftBank with more funds, which may be used to make larger investments in the field of AI ; on the other hand, it will also help Son Masayoshi recover from recent investment losses. The face lost due to failure.
03.
Potential Impact on Global Technology Industry
Arm's listing may have a profound impact on the global technology industry. First, Arm's increased capital may prompt more innovation and research and development, further promoting the development of semiconductor technology. This will help promote innovation in fields such as smartphones and IoT devices, bringing more convenience and possibilities to our lives.
Secondly, Arm’s listing may trigger intensified competition. Other chipmakers may step up competition against Arm, seeking to gain a larger share of the semiconductor market. This competition is expected to drive improvements in chip performance and reduce chip costs, ultimately benefiting consumers.
Most importantly, Arm's listing will increase the complexity of the global technology industry. Because Arm's technology is widely used around the world, its operating and strategic decisions will have a direct impact on many companies. Therefore, the global technology industry may face more cooperation and competition to adapt to this new landscape.
04.
Arm’s Dilemma and Future Development
As a big mountain that cannot be bypassed in the chip industry, although Arm has enabled 99% of the world's smartphones to use its own chip architecture, this also means that the performance expansion space in this field is quite limited , especially considering the global economic slowdown. During the slowdown, demand for mobile phones has been weak, which has been reflected in Arm's revenue, which has shown stagnation. From fiscal year 2021 to fiscal year 2023, Arm’s annual revenue was US$2.027 billion, US$2.703 billion, and US$2.679 billion respectively; net profits were US$388 million, US$549 million, and US$524 million respectively.
Arm also gave its future development direction:
1. It only has a 10% share of the cloud computing market, so this part still has more room for expansion. It is expected that by 2025, benefiting from artificial intelligence, it will grow at an annual rate of 17% .
2. It occupies 41% of the automotive market and is expected to grow by 16%.
3. Royalties, which account for the vast majority of Arm’s revenue, have been increasing since they began to be collected in the early 1990s. Royalty revenue for the latest fiscal year was $1.68 billion, up from $1.56 billion the previous year.
Of Arm’s revenue of US$2.68 billion in fiscal 2023, sales in China contributed 24.5%.
In short, the launch of Arm is an exciting change that will shape our technological future and change our way of life. Let us look forward to Arm's future development and witness the vigorous development and innovative achievements of the technology industry.
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