Samsung, Amazon, Apple, Intel, and Nvidia are reportedly lining up to invest in Arm, lining up with earlier reports. Arm is a British firm that designs the blueprint for almost all mobile devices today. Investments from all leading global semiconductor chip giants will result in the long-term financial stability of Arm.
Nikkei reports that chip designer Arm plans to float its shares via an IPO (Initial Public Offering) in September 2023. This move comes after Nvidia's recently failed $40 billion Arm acquisition attempt. Arm's valuation during its planned IPO is expected to cross $60 billion, making it the world's biggest IPO of the year. Currently, Arm is owned by Japan's SoftBank Group, and it will apply for Arm's listing with the US SEC (U.S. Securities and Exchange Commission) later this month. Then, it must receive approval from the Nasdaq Stock Market.
Samsung and others hope to invest in Arm and hold sway over its management
Arm's valuation has almost doubled since SoftBank acquired it in 2016 for £24 (around 31 billion back then), and the company expects the market valuation to rise further. SoftBank currently owns a 75% stake in Arm, while the rest is owned by SoftBank Vision Fund, which invests in tech firms worldwide. The SoftBank Vision Fund reportedly plans to sell 10-15% of its stake in Arm in the open market. This is where chip giants like Amazon, Apple, and Samsung come in. They are expected to be medium to long-term investors offering Arm long-term stability. They also hope to hold sway over Arm's management.
If you can remember, Arm changed its licensing policies last year after Qualcomm acquired Nuvia. Nuvia was started by ex-Apple and ex-Google chip engineers, and the company designed CPU cores based on ARM's designs. When Qualcomm acquired Nuvia, Arm claimed that Nuvia's license for Arm's chip designs couldn't be transferred to Qualcomm.
With its current business model, Arm charges chip designers like Qualcomm and MediaTek for their chip designs and not end device makers like OPPO and Xiaomi. However, the company plans to change its business model and charge device makers instead. And the prices will reportedly be based on the pricing of the device, which would result in much higher revenue. High revenue is considered necessary to perform well when the company is listed on a stock market. It may also affect Samsung's Exynos chips that use a combination of ARM Cortex CPU cores and AMD GPU cores.
Arm may have tough competition from RISC-V in the future
Apple and Samsung are both chip makers and device makers, so they may have complicated and long-term licensing agreements with Arm, but it would still be good for them in the long term to invest in the company. However, Arm's new business plan may push device makers to RISC-V, which is an open-source and royalty-free alternative chip design architecture. With all the drama going around with Arm, Google has elevated RISC-V to a Tier-1 architecture for Android devices.