Arm has already raised USD 735 million in the IPO process
Technology giant Apple participated in Arm IPO, which took place in September 2023. In addition, the companies signed an agreement under which the American electronics manufacturer will be able to use Arm technology for its processors. It is worth noting that the British company owns the intellectual rights to the architecture of the chips used in almost all Apple devices. Processors based on Arm technology power the entire range of iPhone smartphones, iPad tablets and Mac computers. The new licence runs until 2040.
Apple Corporation is one of Arm’s founders. In 1990, the American IT giant was working on a new product – the Newton computer. The machine needed a processor that was more energy efficient than existing models. At the time, the company commissioned a British developer to create a microchip. Despite the joint efforts, users poorly received the Newton, and Apple refused to release it. However, the partnership gave Arm a considerable boost, which became one of the world’s leading technology companies.
Arm IPO details
Apple has joined Nvidia and others in investing in Arm in the first round of its IPO. The British manufacturer has already raised USD 735 million. As a result of the IPO, Arm’s shares rose by 25% to around USD 63.6. This brings the company’s market capitalisation to USD 68 billion.
CNBC notes the ratio of the company’s value to its actual earnings:
– in the previous four quarters, profits totalled USD 400 million;
– the P/E multiple has risen to 170, the best among technology companies;
– the average for the sector is 21.
The only exception was Nvidia, where capitalisation was 109 times earnings. The reason for this disparity was the excitement around artificial intelligence, which created a significant demand for microchips.
Notably, Arm is not a traditional representative of the technology sector. Most of its revenue comes from selling licences to use its architecture. Arm technology is the basis for about 99% of chips for mobile devices. This means that almost all processors and other chip developers are dependent on the British company.
The importance of Arm is confirmed by the interest in its IPO from technology giants, including Intel, Google and Samsung, in addition to those mentioned above. The active development of artificial intelligence, which requires large numbers of powerful processors to train models, also drives interest in Arm.