SoftBank Group Corp.’s Arm Holdings Ltd. dropped a more than 300-page filing ahead of what’s expected to be the year’s biggest initial public offering, providing details about its role in the burgeoning world of artificial intelligence and machine learning.

The regulatory filing touted hundreds of customers and discussed the AI ambitions for the British chip designer. However, the company warned that sales are slowing, it is highly dependent on Chinese customers, and it relies on a handful of its biggest clients to drive revenue.

Here are some key passages from the filing:

Pivot to Cloud, AI Key as Sales Slow

Arm is positioning itself to benefit from the shift to a world dominated by AI and machine learning, something that will be crucial to win a hefty valuation as sagging smartphone sales cut into what’s historically been one of its main sources of revenue.

The company’s annual revenue declined about 1% to $2.68 billion from the previous year, the filing showed, as Arm blamed an industry that’s been working through an inventory glut. The decline was more pronounced in the quarter through June 30, dropping 2.5% to $675 million, echoing weakness reported by customers like Qualcomm Inc.

Arm’s net income in the period ended June 30 also tumbled more than 50% from a year ago to $105 million. The company generates its revenue primarily from royalties. The payments it receives can recur for years: nearly half of its royalty revenue for the latest fiscal year came from products originally released between 1990 and 2012.

SoftBank’s Vision Fund Buyout

Tokyo-based SoftBank bought out the 25% stake that had been held by the Vision Fund for $16.1 billion in a deal that values Arm at $64.4 billion. Investors, however, shouldn’t read too much into that value according to the filing.

“Investors are cautioned that the purchase price paid” may not be indicative of and isn’t intended to reflect the “expectations regarding the trading price of our ADSs following the completion of this offering,” the filing said. The sale was part of a larger deal that also involved the transfer of other entities from the Vision Fund to SoftBank, it says.

Bloomberg has reported that Arm was aiming for valuations between $60 billion and $70 billion, but compared with smaller peers like Synopsys Inc. and Cadence Design Systems Inc., that’s a lofty target. SoftBank will also pocket the cash raised in the IPO by selling a piece of its stake in place of Arm benefiting from the sale of shares.

China Overshadows AI Mentions

Arm spent more than 3,500 words describing its risks related to China, a key market, but only referenced AI roughly 50 times in the entire filing. The discrepancy came as Arm explained that about a quarter of revenue comes from the Asian country, and its relationship with Arm China, a unit it doesn’t control, is a key driver.

The company’s royalties coming from China slowed in the last fiscal year with a warning there could be more pressure on revenue from the country. That’s on top of any risks of a conflict between China and the US or UK, the filing said.

Arm’s concentration in China paired with slumping smartphone and consumer electronics sales are key risks, Bloomberg Intelligence’s Kunjan Sobhani and Oscar Hernandez Tejada wrote. On the flip side, growth and diversification could be driven by gains in expanding markets like cloud computing, autos and the Internet of Things which are “spurred by secular tailwinds” for AI, the two wrote.

Big Customers, Nothing on Investors

Arm said that more than 260 companies reported that they shipped Arm-based chips in the past fiscal year, including heavyweights Amazon.com Inc., Alphabet Inc., and Nvidia Corp. The company also name dropped Alphabet, Mercedes-Benz, Meta Platforms Inc., and Nvidia as those using its technology to run AI workloads.

The company’s five largest customers, including Arm China, account for more than half its total revenue, Arm said.

In the lengthy document, details surrounding so-called strategic investors that, Bloomberg News has reported, could buy about $100 million of stock each in the IPO, weren’t mentioned. That’s not a complete shock given Arm’s road show won’t take place until after the US Labor Day holiday in early September. However, customers and partners of Arm such as Intel Corp., Nvidia Corp. and Amazon.com Inc. have all been candidates to invest, Bloomberg News has reported.

Big Time Compensation

Returning Arm to the public market after SoftBank took it private in 2016 could generate a payout for chief executive Rene Haas. Haas will get a $20 million reward following a successful IPO while a pair of executives will get a combined $35 million that will vest over three years, the filing shows.

The IPO would come after SoftBank founder Masayoshi Son’s Vision Fund lost a record $30 billion last year. SoftBank took Arm private for $32 billion in 2016 before unsuccessfully trying to sell the company to Nvidia.