Arm secures $54.5b valuation in stock market return

Raises questions about London’s appeal for tech IPOs

Arm, the UK-based chip designer, is once again listed on a stock market: the Nasdaq in New York, signalling tech industry strength but raising questions about London's appeal for tech IPOs.

Arm secured a valuation of $54.5 billion (£43.6 billion) ahead of its return to the stock market. The SoftBank Group-backed chip designer started trading yesterday on the Nasdaq stock market in New York.

Arm managed to capitalise on strong investor demand by selling 95.5 million shares, equivalent to a 9.4% stake in the company, at the top end of a revised price range, valuing each share at $51 (£41).

The pricing strategy reflects the company's cautious approach to ensure a promising launch on the stock market.

The $54.5 billion valuation, while surpassing the $40 billion (£32 billion) abandoned Nvidia deal from last year, still falls short of SoftBank's recent $64 billion (£51 billion) assessment.

Despite the variance, major players in the tech industry like Nvidia, Apple and Samsung have already shown their confidence in Arm's prospects by acquiring shares in the IPO.

Arm, headquartered in Cambridge, employs approximately 2,800 staff and plays a key role in the tech industry, as its processor designs are used in many smartphones worldwide.

For years, Arm derived a large chunk of its revenue from supplying chips to smartphone giants like Apple, Samsung and Google. However, with the global drop in smartphone shipments, as published in a recent Omdia report, Arm is determined to diversify its product offering.

Rene Haas, Arm CEO, said in a statement, "Arm's growth is no longer solely defined by the smartphone market. We have a much more diversified business with market-specific compute platforms deployed in more mobile devices, cloud infrastructure, automotive and IoT."

Arm further owes its resurgence to the wave of excitement around artificial intelligence, as it recently made a deal with Nvidia to launch a platform that will be capable of powering generative AI and 5G/6G applications.

Despite its UK roots and previous listing on the London Stock Exchange until SoftBank's acquisition in 2016, Arm chose to list on the Nasdaq in New York for this high-profile IPO. The decision raised some eyebrows in London, and casts a bleak shadow over Rishi Sunak's efforts to position London as the first choice for technology company IPOs.

Hermann Hauser, an Arm pioneer, blamed Brexit for Arm's decision to list its shares on the New York Stock Market instead of the London Stock Market. "The hope, of course, was to have a dual listing, but that wasn't really possible because of the size of the IPO, and the London Stock Exchange isn't the size it used to be," Mr Hauser told the BBC last year.

As Arm takes its place on the Nasdaq after its nearly two-year pause, the tech world is waiting for the next chapter in the company's journey and its impact on the broader technology landscape.

Franklin Okeke is a content and communication specialist with over five years of experience covering technology and business stories. His works have been published on TechRepublic, TheRegister, Enterprise Networking Planet, ServerWatch, Moonlock and other leading technology publications.