Arm Reaches $65 Billion Valuation in Largest Tech IPO Since 2021
British chip designer Arm debuts on the Nasdaq with a massive $65 billion market cap, signaling a potential revival of the tech IPO market. Major tech giants back the company as it aims to expand beyond smartphones into data centers and automotive sectors.
British chip designer Arm Holdings makes a historic return to the public market, debuting on the Nasdaq at $51 per share and surging nearly 25 percent to close with a $65 billion market cap. This launch marks the largest United States tech IPO since 2021, breaking an 18-month drought in the sector. SoftBank, which took Arm private in 2016 for $32 billion, sells approximately 10 percent of its shares to raise $4.87 billion while retaining a 90 percent stake in the company.
A roster of major technology companies, including Apple, Google, Nvidia, Samsung, and Intel, participates as cornerstone investors, collectively purchasing around $735 million in IPO shares. This strong backing from industry leaders highlights Arm's critical role in semiconductor innovation and artificial intelligence. Arm does not manufacture physical chips but rather designs and licenses the underlying architectures that power nearly every smartphone globally, with over 250 billion Arm-based chips shipped to date.
Despite the celebratory debut, Arm navigates recent financial headwinds, reporting a slight one percent drop in revenue and a 22 percent decline in net income for the fiscal year ending in March 2023 due to a smartphone market slump. To counter this stagnation, the company pushes aggressively into new growth areas like data centers, automotive systems, and the Internet of Things. Arm also increases royalty rates on its newest designs to five percent, up from three percent on older technology, as it faces a high valuation that demands robust future growth.