ARM, keystone of global electronics, goes public

2023-09-14 05:15:11
René Haas, CEO of ARM, in Taipei (Taiwan), May 29, 2023. RITCHIE B. TONGO / EPA-EFE

The boilerplate buildings in the inner suburbs of Cambridge, United Kingdom, are of little interest. Inside, the rows of computers don’t mean anything special. There are no high-tech laboratories or scientists working in white suits. Nothing is made on site.

The world headquarters of ARM Holdings is, however, the heart of a strategic company, a sort of keystone of global electronics. His inventions are found in 99% of the world’s cell phones, two thirds of connected objects and 40% of cars. This year alone, around thirty billion electronic chips will have been produced based on his research. “Approximately 70% of the population uses a product based on ARM technology”says the company.

ARM makes its IPO on Nasdaq in New York on Thursday, September 14. The Japanese investment fund Softbank, which bought it in 2016, is selling almost 10% of the capital. The stock, listed at $51, at the high end of the range, brings in just over $5 billion, valuing the company at $52.3 billion (around $48.8 billion). euros).

Patent factory

“Frankly, it seems very expensive to me”, puts Jay Goldberg, of the financial analysis company D&D Advisors, into perspective. With $2.7 billion in revenue and $520 million in profit, ARM is far from being a financial giant.

On the stock market, Apple is worth sixty times more, Amazon thirty times more. However, no one can easily do without this technology. For his book retracing the history of ARM, the journalist James Ashton chose as the title “the model of everything” (The Everything Blueprint. The Microchip Design That Changed the World2023, untranslated).

For more than thirty years, the numerous researchers at ARM – which has 6,000 employees, 80% of whom are engineers – have produced the basic design of the circuits making up electronic chips. They do not manufacture them, but sell the intellectual property. Each company can then modify it according to its needs.

A bit like the standardization of containers on ships has accelerated globalization, this veritable patent factory has established itself as the essential standard in its sector. “The success was unimaginable”enthuses Herman Hauser, its co-founder, who no longer has any ties to the company.

ARM is not the inventor of the most efficient chips. Its competitive advantage is that its design allows it to use less energy for the same power than competitors. For mobile phones, where battery life is a central factor, and overheating must be avoided, this is essential.

You have 71.17% of this article left to read. The rest is reserved for subscribers.