British chip maker Arm to cut valuation ahead of US listing

SoftBank CEO Masayoshi Son is heavily dependent on the success of Arm's upcoming New York listing. Credit: Kiyoshi Ota/Bloomberg

The listing is being watched closely as investors hope it will breathe life into a dormant IPO market and boost confidence in the tech sector, which has been hit by last year's plunge in valuations.

B As part of the offering, a host of tech giants including Apple, Google, Samsung and Nvidia will buy up to $735 million worth of shares. Other companies investing in the listing include Taiwanese chip giants Mediatek and TSMC, chip makers Intel and AMD, and semiconductor design companies Synopsys and Cadence.

Amazon and American chip maker Qualcomm, which were rumored to be possible investors, are not participating.

Investors who are the UK company's main clients are likely to be long-term investors, although Arm said the purchases would not they have no additional rights.

< p>Many banks also signed the deal.

The reduction in the size of the offering comes as a blow to Masayoshi Son, SoftBank chief executive and chairman of Arm, who hopes the successful listing will offset a string of disappointing tech investments.

SoftBank paid £24bn to buy the Cambridge-based company in 2016 and expects to make a significant profit on the purchase amid investor hype over the artificial intelligence boom that has propelled U.S. chipmaker Nvidia to a $1.2 trillion valuation.

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It will remain the dominant shareholder of Arm immediately after the listing, holding approximately 90.6% of the shares, and will be prohibited from selling further shares for 180 days after the listing.

Arm decided to place shares in New York despite the agreed efforts. from Rishi Sunak to encourage the company to return to the London Stock Exchange, in part because tech companies are perceived to be much more highly valued in the US.

Arm's semiconductor designs are used in 99% of the world's smartphones and the company claims that 70% of the world's population uses its technology, but investors have raised questions about its growth potential.

Its revenue fell slightly last year, and the company is considered susceptible to a microchip trade war between the US and China. China accounted for 24% of Arm's sales last year, and its Chinese division operates independently, which the company says exposes it to «significant risks.»

The company is embarking on an investor road show in the coming days . we will agree on the final price and publish it next week.