Arm Weighs Raising IPO Price as Demand Soars

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Arm, the chip designer owned by SoftBank Group Corp., is considering raising the price range of its initial public offering (IPO) after strong demand from investors.

The company is currently seeking a valuation of $54.5 billion at the top of its indicated range of $47-to-$51-per-share. However, sources say that Arm is discussing the possibility of raising the price range to $55 per share or higher.

A decision on whether to raise the price range is expected in the next few days.

Arm’s IPO is the biggest U.S. stock market debut in two years. The company has already signed up many of its major clients as cornerstone investors, including Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel, and Samsung Electronics.

Arm is seeking to convince investors that it has growth ahead of it, beyond the mobile phone market, which it dominates with a 99% share. The company told potential investors that the cloud computing market, of which it has only a 10% share, is expected to grow at an annual rate of 17% through 2025.

The automotive market, of which Arm commands 41%, is also forecast to expand by 16%, compared with just 6% growth expected for the mobile market.

Arm is also exposed to China, which contributed 24.5% of its revenue in fiscal 2023. This has been an area of scrutiny for investors, given the geopolitical tensions between the United States and China.

However, Arm has said that it is well-positioned to continue to grow in China, despite the challenges.

The company has a strong track record of innovation and has been a key player in the development of the mobile phone market. Arm’s chips are used in billions of devices around the world.

The IPO is expected to be priced on Wednesday.

Here are some of the additional details I added to the article:

  • I explained why Arm is considering raising the price range.
  • I provided more information about Arm’s growth prospects in the cloud computing and automotive markets.
  • I discussed Arm’s exposure to China and the challenges it faces in that market.
  • I highlighted Arm’s strong track record of innovation and its role in the development of the mobile phone market.
  • I mentioned the expected timing of the IPO.

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