What investors did Arm harvest in its return to the public markets?

Since the termination of NVIDIA's acquisition plan, SoftBank has been actively exploring the opportunity to take Arm public again. In late August of this year, Arm finally initiated its IPO, aiming to re-enter the Nasdaq stock market. At that time, Arm had not yet disclosed the number of shares to be issued and the price range. It was only on September 5th that they updated this information, with a total issuance of 95.5 million ADS (American Depositary Shares) priced between $47 and $51 per share, with only 9.4% of shares allocated for free trading. It is expected that the market value of Arm will exceed $50 billion after a successful IPO. This move has attracted considerable interest from large-scale investors, each of whom has their own intentions and considerations.

Potential Anchor Investors

According to Arm's SEC public filing, potential anchor investors include companies like AMD, Apple, Cadence, Google, Intel, MediaTek, NVIDIA, Samsung, Synopsys, and TSMC. These anchor investors have expressed their intention to purchase up to $735 million worth of ADS. However, these are only intentions, and any of these companies may choose to buy more or fewer ADS or opt-out of participating in the IPO.

The interest from these anchor investors reflects Arm's attractiveness to various semiconductor companies, and it's worth analyzing their intentions:

Chip Design Companies (AMD, Apple, Google, MediaTek, NVIDIA): These companies have all designed chips based on the Arm architecture. Apple, Google, and MediaTek have developed high-performance smartphone chips using the Arm architecture (Apple's A-series, Google's Tensor, MediaTek's Dimensity series). AMD and NVIDIA, while known for x86 and GPU technologies, have also ventured into the Arm-based chip market. Their investments in Arm indicate their confidence in Arm's future and their commitment to designing superior chips based on the Arm architecture.

IP Companies (Synopsys and Cadence): While Synopsys and Cadence are known for their electronic design automation (EDA) businesses, they have been expanding their IP (Intellectual Property) offerings. These companies provide third-party IP, including memory and interface IP, used in various chip designs. Their investments in Arm align with the trend of growing demand for IP in chip designs and strengthen their presence in the IP market.

Foundry Companies (Samsung and TSMC): As semiconductor foundries, Samsung and TSMC manufacture chips for various clients, a significant portion of which are based on the Arm architecture. Their investments in Arm are in line with their deep collaborations with Arm and their role in manufacturing Arm-based chips, including mobile SoCs and IoT chips.

Confirmed Investors

Among the potential investors mentioned in Arm's public filing, Intel and NVIDIA have publicly announced their participation.

Intel: Intel's investment in Arm's IPO is seen as a strategic move to strengthen its foundry business (Intel Foundry Services or IFS). By investing in Arm, Intel aims to demonstrate its commitment to collaborating with Arm and providing leading-edge manufacturing technology for Arm-based designs. This partnership could extend beyond smartphones to include client PCs and server SoCs, expanding Intel's customer base for designing Arm-based chips.

NVIDIA: NVIDIA's investment in Arm's IPO emphasizes the importance of Arm's architecture in NVIDIA's product ecosystem. It highlights that Arm is crucial to NVIDIA's long-term chip development strategy, including the creation of Arm-based server chips like the NVIDIA Grace series. This move indicates NVIDIA's plans to build a broader ecosystem around the Arm architecture.

Closing Thoughts

Arm's IPO is one of the most significant events in the semiconductor industry this year, with implications not only for the future of Arm as a company but also for the broader semiconductor market. Its success or failure will set the tone for the semiconductor market's outlook in the coming quarters. If the IPO is successful, it will signify continued investor enthusiasm for the semiconductor market, raising hopes for market recovery in the coming year.