Arm Holdings, the British chip designer, has secured a valuation of £41.9bn ($52.3bn) in its initial public offering (IPO) ahead of its return to the stock market in New York. The IPO is the biggest Wall Street has seen since Rivian Automotive’s market debut in 2021 and is the largest IPO of the year. The company, which was owned privately by Japanese investor SoftBank since 2016, priced its shares at $51 each and sold 95.5m shares, raising $4.87bn for Softbank. Arm Holdings has more than 500 clients, including Samsung, Google, and Apple, who use its chip designs across a range of products from iPads and mobile phones to cars and smart TVs.
Earlier this month, Arm Holdings lowered its targeted valuation before the float. According to Reuters, the company was aiming for a valuation between $50bn and $55bn, down from the $64bn valuation given by its owner, Softbank, in a transaction last month. Arm Holdings announced earlier this year that it would only list in the US, despite British Prime Minister Rishi Sunak’s ambitions to make London the first choice for tech flotations.
Arm Holdings is dubbed Britain’s most successful tech company and predicts on its website that 70% of the world’s population use Arm-based technology. The global chip powerhouse employs more than 5,000 people. Arm’s elevated share price is partly due to the benefits the sector is expected to enjoy from the hype around artificial intelligence (AI), which requires ever-more powerful chips to process the necessary computations. Without Arm’s designs, the iPhone and other smartphones would not work.
Arm’s valuation is exceedingly high for a chip company compared with other firms in its market, other than semiconductor-maker Nvidia, which is worth more than $1tn.