Tech company Arm's IPO could be biggest of year, though competition is stiff

Aug. 22 (UPI) -- The initial public offering of Arm, an England-based chipmaker owned by Japan's SoftBank, could be the largest of the year, though its own filing shows risks run the gamut from geopolitical issues to supply-side constraint.

SoftBank on Monday filed paperwork with the U.S. Securities and Exchange Commission to list Arm on tech-heavy Nasdaq.

No share price was listed, though analyst at financial services firm Bernstein estimated its fair-market value at around $40 billion, some $12 billion more than SoftBank paid for the chipmaker in 2016.

Arm's system services are near-ubiquitous in the digital age, with its chip designs embedded in most major lines of smartphones and laptops. Speaking to CNBC late last year, Arm CEO Rene Haas said her company was indispensable.

"Given the fact that we license the technology to all the major players in the industry, no one can really afford to miss a product cycle or scale back on R&D or not do a product," she said.

SoftBank in the F-1 form with the SEC reported Arm's net income of $524 million and total revenue of $2.68 billion for its fiscal year ended in March. At a time when lending is somewhat prohibitive due to aggressive rate hikes, not just in the U.S. market, but globally, Arm could face some headwinds, however.

"We face intense competition and could lose market share to our competitors," it said in the filling.

The company added that its revenue stream was largely dependent on how much other companies adopt its technology.

Apart from competition, the company listed everything from supply-side constraints to "adverse development in the economic and political conditions" of the regions in which it operates as risk factors that could undermine its value.

SoftBank itself reported a net loss of $3.3 billion for the second quarter. The market in which Arm operates, however, could grow by 7% annually to reach $247 billion by the end of 2025, the company said in the SEC filing.

The IPO follows the collapse of a $40 billion effort by Nvidia and Softbank to sell Arm. The U.S. Federal Trade Commission ruled that the "vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips."

Arm in March announced plans to eliminate nearly 1,000 jobs