British chip designer ARM, backed by SoftBank Group, is in talks with potential strategic investors including Intel to anchor what will be one of the largest initial public offerings of the year, according to people familiar with the matter.
ARM has held talks with other companies about participating in the IPO, the people said, asking not to be identified because the matter is private. The talks are early and could still fall apart ahead of the listing, the people added. It’s also unclear how much would be invested in ARM or what the structure would be.
ARM is looking to raise as much as US$10-billion in its listing in New York later this year. Shares of SoftBank rose more than 7% on Tuesday morning in Tokyo.
Representatives for Intel and ARM declined to comment.
Bringing on an anchor investor in an IPO can help drum up interest and momentum, especially in a rough market for new listings. If the talks succeed, Intel would eventually be listed in ARM’s IPO prospectus ahead of the listing.
Anchor investors buying $100-million to $200-million worth of shares have been popular for semiconductor-related IPOs in recent years. Growth equity firm General Atlantic invested about $100-million in Intel-backed Mobileye Global’s IPO last year while Qualcomm backed GlobalFoundries’ listing in 2021.
A key part of Intel CEO Pat Gelsinger’s push to return the company to the pinnacle of the semiconductor industry is a plan to open up its factories to other firms, even rivals. If he’s to be successful in competing with Taiwan Semiconductor Manufacturing Co in outsourced production, Intel will have to produce chips that contain ARM’s widely used technology.
Technical tie-up
The two have already announced a technical tie-up. ARM’s designs and industry-standard instruction set are used in everything from Broadcom networking chips to Apple processors in the iPhone and Macs to Qualcomm’s ubiquitous chips for mobile phones.
By taking a position in ARM, whose technology has enabled direct competition for Intel’s processors, Gelsinger may be seeking to show his commitment to ARM and to embracing that openness. Throughout its more than 50-year history, Intel’s plants have almost exclusively worked on its own designs.
SoftBank founder Masayoshi Son has said he hopes the ARM IPO can be the largest ever by a chip company. ARM’s valuation still hasn’t been set and the company could be valued anywhere from $30-billion to $70-billion. — Liana Baker, Swetha Gopinath and Ian King, (c) 2023 Bloomberg LP
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