ARM could be the next big semiconductor IPO

Insight Bite
Chip revenues surge on global shortage

ARM could be the next big semiconductor IPO

Approval of Nvidia’s acquisition of ARM is looking less likely as corporations voice dissent and antitrust authorities put the deal under the microscope.

Though Nvidia has pledged not to change how ARM operates, several of the chip designer’s customers are not convinced – suggesting they were not consulted before the transaction was proposed. Google, Microsoft and Qualcomm have all raised competition concerns, fearing that an end to the neutrality of the Switzerland of Semiconductors would imperil ARM’s impartial approach to business. This would spell bad news for Qualcomm, which relies on ARM’s designs for its Snapdragon chips, and Microsoft and Google, which favour ARM-based chips for their datacenters.

In addition, multiple antitrust authorities have begun to probe the deal. China has voiced objections about an American firm owning such a strategic player in the semiconductor industry, the EU and the UK are set to open in-depth investigations, and the US Federal Trade Commission has joined the scrutiny.

A failed acquisition might be the best outcome for global tech, but it would likely cement ARM’s status as un-acquirable. In turn, Softbank could turn to an IPO as a last resort. Founder Masayoshi Son has previously said this would be a potential option for the company.

Relisting ARM on the London or New York Stock Exchange would solve competitive concerns, and while it might prevent Nvidia from capitalizing on the growing popularity of ARM chips, the firm would still have access to the designs.

After an unexpectedly banner year for IPOs in 2020, ARM’s prospects for a public listing could be good. For a long time, IPO investors have not had the opportunity to bet on a major chip player, and the series of highly successful tech offerings over the last year could create a keen appetite for the leading chip designer.

“It is hard to believe that ARM didn’t get a level of unofficial buy-in from their customer base before announcing an exit to Nvidia. Regardless, the transaction is facing severe headwinds and in the current climate I can’t see it happening.”

Matthew Byatt | Managing Partner and Semi Conductor Practice Lead

MATTHEW BYATT

Managing Partner

Matthew is a Co-Founder and Managing Partner at Acuity and leads the Acuity Advisors’ Deeptech practice.

Matthew has held senior leadership and corporate finance positions with some of the UK’s most successful and influential technology and consultancy companies. Roles with ARM, McKinsey and Cadence have given Matthew an exceptional insight into the world’s most successful businesses and a number of the UK’s eminent start-ups, underpinning his success at Acuity.

Matthew has considerable experience across a broad range of technology sectors throughout the UK, US and Asia, ranging from nanotechnology, semiconductor and cleantech to digital media and internet businesses. It’s experience that has given him a robust, well-developed and international network. Having also run and successfully exited his own business, Matthew has a deep understanding of the financial and emotional aspects of this demanding process, bringing a unique and authoritative perspective to each business sale.

One of Matthew’s strengths is understanding complex technical value propositions, one of the benefits of training as an electronic engineer. He gets to the heart of what drives a company’s value and communicates this persuasively to potential buyers and investors. Matthew understands a buyer’s motivation intuitively and delivers a compelling rationale for why a business sale should be of strategic interest. His insight consistently yields higher deal values and results in great successes for his clients.

Insight Bite