British chip designer Arm Ltd., backed by SoftBank Group Corp., is in talks with potential strategic investors including Intel Corp. to anchor what will be one of the largest initial public offerings of the year, according to people familiar with the matter.
Arm has held talks with other companies about participating in the IPO, the people said, asking not to be identified because the matter is private. The talks are early and could still fall apart ahead of the listing, the people added. It’s also unclear how much would be invested in Arm or what the structure would be.
Arm is looking to raise as much as $10 billion in its listing in New York later this year, Bloomberg News previously reported. Shares of SoftBank rose more than 7% Tuesday morning in Tokyo.
Representatives for Intel and Arm declined to comment.
Bringing on an anchor investor in an IPO can help drum up interest and momentum, especially in a rough market for new listings. If the talks succeed, Intel would eventually be listed in Arm’s IPO prospectus ahead of the listing.
Anchor investors buying $100 million to $200 million worth of shares have been popular for semiconductor-related IPOs in recent years. Growth equity firm General Atlantic invested about $100 million in Intel-backed Mobileye Global Inc.’s IPO last year while Qualcomm Inc. backed GlobalFoundries Inc.’s listing in 2021.
A key part of Intel Chief Executive Officer Pat Gelsinger’s push to return the company to the pinnacle of the semiconductor industry is a plan to open up its factories to other firms, even rivals. If he’s to be successful in competing with Taiwan Semiconductor Manufacturing Co. in outsourced production, Intel will have to produce chips that contain Arm’s widely-used technology.
The two have already announced a technical tie-up. Arm’s designs and industry-standard instruction set are used in everything from Broadcom Inc. networking chips to Apple Inc. processors in the iPhone and Macs to Qualcomm Inc.’s ubiquitous chips for mobile phones.
By taking a position in Arm, whose technology has enabled direct competition for Intel’s processors, Gelsinger may be seeking to show his commitment to Arm and to embracing that openness. Throughout its more than 50-year history, Intel’s plants have almost exclusively worked on its own designs.
SoftBank founder Masayoshi Son has said he hopes the Arm IPO can be the largest ever by a chip company. Arm’s valuation still hasn’t been set and the company could be valued anywhere from $30 billion to $70 billion, Bloomberg News previously reported.
(Updates with SoftBank share gain in third paragraph)
Author: Liana Baker, Swetha Gopinath and Ian King