At a time when public offerings in the USA are losing momentum, Arm's IPO, which will be one of the biggest openings of recent times, is gaining momentum.

The chip design company owned by Japanese SoftBank filed for an initial public offering on the Nasdaq stock market yesterday. The filing comes 18 months after Silicon Valley chip giant Nvidia (NVDA) dropped its offer to buy Arm for $40 billion.

70% of the World's Population Uses Arms

Let's get to know a little bit about Arm first. Arm Holdings is a British company specializing in chip architecture, which not only manufactures microchips but also designs them. "We estimate that around 70% of the world's population uses Arm-based products," the company said in its application. made statements.

This means that nearly every internet user is exposed to a product made with Arm technology every day, including cars, smartphones, drones, and even electronic passports.

The company's energy-efficient technology also played a key role in fueling the cell phone boom, including all the iPhones Apple (AAPL) has sold since 2007.

In addition, the company has created a global ecosystem with more than 1,000 partners who have embedded more than 250 billion Arm-based chips into products. Arm has been a driving force in the semiconductor industry for over 30 years.

Arm was a public company until 2016 when it was acquired by SoftBank for $32 billion. The company reported $2.68 billion in revenue for the fiscal year ending March, just under $2.70 billion a year earlier.

Monopoly Position Can Strengthen Arm's Hand

So, why is this public offering so important? First, the move will provide Arm's parent company SoftBank with more capital to increase its investment in start-ups.

SoftBank's CEO, Masayoshi Son, said in a recent meeting with investors and analysts that the company was ready to "take the offensive" in the field of artificial intelligence.

According to Bloomberg, SoftBank was initially targeting a valuation of $60 billion, which is nearly double what it paid for Arm in 2016.

But Arm's revenue in 2022 was approximately $2.6 billion, and if investors evaluated the company on the average market cap/revenue ratio of the Philadelphia Stock Exchange Semiconductor Index, the company would be worth approximately $24 billion.

Therefore, Arm's IPO may not be as lucrative as its planned deal with Nvidia. Global investment banks value the company between $30 billion and $70 billion.

However, Arm has the potential to be one of the most important public offerings of 2023, as it is in a "almost monopoly" position in some parts of the industry.

The rest of the industry will have seen this as well, as Nvidia, Intel (INTC) and Amazon (AMZN) took action to be the lead investor in the Arm IPO.

What's next?

Arm's IPO filing means the company can begin to gauge investor interest critical to the sale of shares.

Rene Haas, Arm's CEO since February 2022, has pushed the company into more lucrative areas, including data center servers operated by companies like Amazon.

Along with how successful this effort has been, high-profile investors and potential changes to Arm's business model that will generate more revenue will likely be a key issue for investors viewing the application.

My opinions are not investment advice. Please do your own research.