Arm Prices IPO At $51 Per Share, Valuing Company At Over $54 Billion

Arm, the British semiconductor and software design company, has priced its initial public offering at $51 a share, valuing its market cap at over $54 billion. It's set to start trading on Thursday under the symbol "ARM." CNBC reports: The U.K.-based company is listing at least 95.5 million American depository shares on the Nasdaq, and SoftBank, its current owner, will control about 90% of the company's outstanding shares. The offering is at the top of Arm's expected price range of $47 to $51. Arm said in its prospectus that revenue in its fiscal year that ended in March slipped less than 1% from the prior year to $2.68 billion. Net income in fiscal 2023 dropped 22% to $524 million.

That sounds about right

[bruce_the_moose]

Some variant of Acorn Risc Machine architecture is in a few billion pockets around the world.

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[Artemis3]

Until China replaces it with RISC-V, because paying ARM is silly.

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[alvinrod]

The ISA is somewhat meaningless. Even x86 CPUs break their instructions up into something that more closely resembles a RISC-based approach. ARM builds a reference core implementation that's used by a lot of different companies. Some like Apple, Qualcomm, and a few others try to design their own cores, but many of those companies have had products that performed no better than the reference design from ARM. Unless your volume is sufficiently high or you have other good reasons, it's less expensive to just b

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[tlhIngan]

The ISA is somewhat meaningless. Even x86 CPUs break their instructions up into something that more closely resembles a RISC-based approach. ARM builds a reference core implementation that's used by a lot of different companies. Some like Apple, Qualcomm, and a few others try to design their own cores, but many of those companies have had products that performed no better than the reference design from ARM. Unless your volume is sufficiently high or you have other good reasons, it's less expensive to just b

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[Luthair]

China? Any commodity device that doesn't require a lot of compute is already looking at it, heck I believe Western Digital has been shipping their own design in drives.

Re:That sounds about right

[backslashdot]

The ARM license is only 1 or 2% of the chip cost. Is it really worth the risk to use a less supported architecture? On average, ARM makes 10 cents per chip -- average. So again, can ask it a different way.. is it really worth the risk of a new architecture to save 10 cents off the cost of a $500 smartphone?
Found this via google:
As of 2021, ARM revenue hit USD 2.7 billion. In 2021, Arm reported shipped 29 billion Arm-based chips.
ARM Example Royalties
IP Royalty (% of chip cost)
ARM7/9/11 1.0% - 1.5%
ARM Cortex A-series 1.5% - 2.0%
ARMv8 Based Cortex A-series 2.0% and above
Mali GPU 0.75% - 1.25% adder
Physical IP Package (POP) 0.5% adder

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[Pinky's Brain]

Look at what happened to Qualcomm/NUVIA ... It's 1-2% now, but investors will want more.

ARM can't extract much wealth from Apple due to ancient contracts, so their competitors are caught between the rock of Apple competition and the hard place of ARM seeking to extract more of their margin.

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[ctilsie242]

You should see the work being done with RISC-V. SBCs, especially development boards, are coming out from China at a pretty good rate, and even with their lousy software and Linux kernel support, can support pretty good speeds, and have a large amount of I/O ports. RISC-V is also becoming prevalent in a lot of places, be it HDD controllers, and many other embedded spots. On the high end, there are RISC-V developments making server tier CPUs. No, they are not Xeon competition yet, but give it some time an

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[caseih]

Yeah there is a chance vendors producing SoCs that implement the RISC-V ISA will eventually give ARM a run for its money. Time will tell.

In the meantime, neither ARM nor RISC-V is ever going to replace x86 for things like laptops, servers, and desktops. Neither have bothered to implement a platform standard like Intel and the IBM PC did years ago. Every implementation has its own boot technique, unique device trees, and proprietary gpus glued on. Linux support on ARM and RISC-V is really bad, frankly, an

Re:That sounds about right

[Luthair]

A 100x net income seems like a lot to me.

Finally.

[Petersko]

A tech IPO valuation that makes sense to me. It has been a while. The company makes something valuable, has a decent track record as a business, and turns a profit. Seems like they inhabit some rarified air.

As a result, they might even seem stodgy, old school, and unattractive to hip, young investors. Oh man, I got to get me some of that!

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[Maury Markowitz]

> At a P/E ratio of ~100:1 though, with limited capacity for huge growth in the future?

I came here to say this. I think even 50x would raise a lot fewer eyebrows. But we're talking SoftBank, so the ROI has to be pumped.

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[Petersko]

Well, that's fair. I didn't look too deep into it. I was making a point that was more against other IPOs than pro this one.

RISC-V failed?

[backslashdot]

It would have been better if multiple companies got together and made an open standard without the fragmentation and bickering of RISC V. It's possible. Look at 5G/LTE, WiFi, bluetooth, USB, MPEG, etc.

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[Maury Markowitz]

> Eventually, Apple will follow as well.

Why would they?

They have demonstrated they have no interest in the underlying ISA, having changed ISAs five times now. There's no reason for them to switch in order to maintain compatibility with a possible future market. Heck, they probably see that as a negative.

And price certainly doesn't factor into it. They pay Arm practically nothing due to grandfathered contracts, and removing those would be less than 1% per CPU core, which is *maybe* 0.001% of the total cos

Legal responsibility to maximize profits

[Jeslijar]

I can't wait to see what the future holds for ARM!

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[fahrbot-bot]

I can't wait to see what the future holds for ARM!

I can't wait to see the IPO price for Leg ... :-)

RISC V

[bill_mcgonigle]

I got my first RISC-V server this week.

Good timing, ARM!

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[jddimarco]

Interesting. What did you get, how much did it cost, and how does it perform (both absolute compute and per watt)? (not a rhetorical question, I am actually curious) My thoughts for what it is worth. ARM is certainly very far ahead of RISC-V and RISC-V does seem to be maturing quickly. It's certainly imaginable to consider the possibility that RISC-V will catch up to ARM, but it's also imaginable that it won't, as ARM is doing quite nicely, even making inroads into the server marketplace (Ampere) where it