After Intel And Nvidia, Arm Invites Amazon As Anchor Investor For Its IPO

Amazon (NASDAQ:AMZN) could join other tech companies as an anchor investor in the initial public offering of Arm Ltd., a Softbank-backed chip designer looking to raise as much as $10 billion in its public offering, according to sources familiar with the situation.

Amazon is one of several tech companies that have spoken with Arm about backing the bid, which is expected next month, said the source, who asked not to be named because the deliberations are private. Arm, a chip designer that counts the world’s biggest technology companies as its customers, has also held discussions with Intel Corp. (INTC) and Nvidia Corp. (NVDA).

Representatives for Amazon and Arm declined to comment. Reuters previously reported on the talks with Amazon.

Arm, owned by SoftBank Group Corp, is gearing up for what promises to be the biggest tech IPO of the year. It has spent months talking to some of its top clients about taking part in the bid, Bloomberg reported.

Amazon, with its extensive Web services operation, is one of Arm’s biggest customers, preferring Arm-based chips because of their cost and efficiency. The technology is used by 40,000 Amazon customers.

Bloomberg reported last week that Arm is targeting an IPO with a valuation of $60 billion to $70 billion as early as September, aimed at capitalizing on the popularity of artificial intelligence (AI) chips. The roadshow is scheduled to start in the first week of next month, with pricing for the IPO the following week, said a person familiar with the matter. Japan’s SoftBank acquired the chip company in 2016 for $32 billion.

Chip valuations in general are up a lot this year, especially for companies with a presence in artificial intelligence equipment. Nvidia, which makes so-called AI accelerators, has seen its shares more than triple this year. That company had already planned to acquire Arm, but had to back out of the purchase last year after facing regulatory hurdles. SoftBank, led by billionaire Masayoshi Son, began pursuing Arm’s IPO after the takeover fell through.

At the upper end of the estimates, Arm’s IPO would be the tech sector’s biggest since Alibaba Group Holding Ltd. in 2014 and Meta Platforms Inc. – then Facebook Inc. – in 2012. It is scheduled to come during a slow period for IPOs, which have been sidelined by an uncertain economy and the war in Ukraine.

Amazon uses Arm’s designs in its Graviton server processors, an alternative to the traditional data center chips offered by Intel. Amazon has produced several generations of Graviton and other types of chips using Arm’s technology.

One of Arm CEO Rene Haas’ main goals is to get a bigger share of that data center market — and that’s part of the IPO’s investor appeal. Arm’s chip designs are already pervasive in smartphones and other markets where efficiency and low power consumption are valued.


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