High-tech giants Amazon, Apple, Intel, Nvidia, and Samsung are looking forward to becoming anchor investors in Arm's upcoming initial public offering, according to reports from Bloomberg and Nikkei, citing sources with knowledge of the matter. This IPO might amass up to $10 billion and elevate Arm's valuation to a staggering $60 to $70 billion, according to Bloomberg's estimates.
Arm, which is owned by SoftBank Group, is preparing for what will potentially be the year's largest tech IPO, and has engaged with major customers for months regarding their participation. The company has held talks with key global chip designers about becoming anchor investors, and companies like Amazon, Apple, Intel, Samsung, and Nvidia are expected to invest in Arm upon its market listing (note that none of these companies have formally confirmed intention to buy an Arm stake, however). Arm's strategy involves offering these processor developers medium- to long-term shareholding with the intention of ensuring stock price stability during the listing.
Arm's global impact on chip designs is undeniable. In the smartphone sector, Arm-based SoCs command close to a 100% market share. They also command a sizeable share in the consumer electronics industry, and, thanks to the efforts of Apple and Qualcomm, Arm's technology is gaining traction in PCs as well. Throughout the history of Arm, over 250 billion chips based on its architectures have been produced.
Apple, Samsung, Nvidia, and Qualcomm produce some of the world's best known Arm-based SoCs, which is why Apple (who already has a stake in Arm), Samsung, and Nvidia have reason to invest in the chip IP designer. But Amazon seems to have a particularly good reason to invest in Arm: apparently, Amazon Web Services dominates the Arm server market, with over half of all Arm-based server CPUs globally deployed in AWS datacenters, according to a Bernstein Research report cited by The Register.
The Graviton system-on-chip family, introduced in 2018 and optimized for AWS powered around 20% of AWS CPU instances by mid-2022 — which is a significant portion. These SoCs, optimized for AWS's requirements, have more cores per socket than competing x86 offerings, reduced power consumption, and significant cost benefits — partly because Amazon does not have to pay premium to AMD or Intel and to a large degree because of lower total cost of ownership and power consumption. The report asserts that in some cases AWS can achieve 20% to 70% lower costs at the same performance compared to competing x86 CPUs, though the details are unclear.
Given the tangible advantages that AWS has with its Arm-based SoCs, it is evident that the company has invested massively in datacenter software ecosystem for Arm processors. Therefore, the company is likely more than interested in further development of the Arm instruction set architecture (ISA) in general and datacenter-oriented Neoverse CPU cores in particular.
SoftBank, which acquired Arm in 2016 for $32 billion, tried to sell the company to Nvidia for about $40 billion in 2020 – 2022, but regulatory issues prevented the sale. In the aftermath, SoftBank chose to steer Arm towards an IPO. If the IPO reaches its peak valuation, it would rival the tech sector's largest IPOs — such as Alibaba in 2014 and Meta Platforms (formerly Facebook) in 2012.
