ARM’s much anticipated IPO is around the corner #makerbusiness

The technology company Arm, majority owned by SoftBank, will soon have its IPO on the New York Stock Exchange. First though, what is ARM?

Arm isn’t a chipmaker itself. Rather, the company is responsible for coming up with the “architectures” — or overall designs, including components and programming language instructions that other companies use to build chips. Its original value was designing chips with extremely low energy consumption compared with the X86 chips common in personal computers at the time. It’s seen as something of a neutral party or “Switzerland” in tech, since its designs are used in nearly smartphone processors, including those made by Apple, and increasingly, server and laptop processors as well.

Arm is incredibly important in that its used in all kinds of chips, in all kinds of devices, made by many different companies.

Speaking with CNBC at a developer conference in October 2022, Arm CEO Rene Haas said that companies can’t afford not to work with the company, given its technology is embedded in virtually every device out there.

An article in The Verge discusses the pitfalls of this fact.

Because this is a licensing business, understanding Arm means understanding its customers. Arm’s top five customers accounted for more than half of its revenue last year, which means those customers have significant bargaining power. That puts some limitations on Arm’s ability to set pricing for its services — and it may need to raise prices to accommodate slowing demand in some of these sectors.

Arm’s clients — which include Apple, Amazon, Intel, Nvidia, and Google, among others — are considering buying into the IPO. “These companies’ interest is fueled by a desire to expand their commercial relationship with Arm, and make sure that their rivals do not gain an edge,” Reuters reports.

Arm is trying to position itself in the AI buzz, but it’s also growing in the much more boring but proven datacenter space.

SoftBank will still own shares of the company after the IPO, and Arm China has its own set of ownership concerns, so the future of Arm is still up in the air. A shaky stock market may not help the IPO, but this is one to watch.


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