Arm, the great debut on the stock market of the year, is reeling from its relationship with China

2023-08-23 00:11:46

LAURA DE LA QUINTANA

Madrid

Updated Wednesday, August 23, 2023 – 00:11

Investors’ alarms resonate because the SoftBank subsidiary has recognized “a strong sensitivity” to geopolitical risks between the US and the Asian ‘giant’

SoftBank Chairman Masayoshi Son during a conference in Japan in November 2022. WORLD Arm, SoftBank’s monopolistic chip business, prepares the biggest IPO of the year in New York

Arm, a subsidiary of SoftBank chips, has passed in a few hours to present its listing brochure on the Nasdaq in New York as largest stock exit since 2021 to put its premiere on the table due to the doubts that it has aroused among qualified investors due to its exposure to China. It is the company itself, which has a practically monopolistic business in the chips used by mobile phones, who has recognized in the list of risks – typical of any incorporation document – that a quarter of its sales are generated within the Asian giant. .

The the bible of the economic press, the Financial Timesechoed yesterday the “alarm” that has unleashed among large American investors the fact that the company itself recognizes that it is “particularly susceptible to economic and political risks due to possible tensions that may arise between the Chinese and US governments.”

For now and waiting for what might happen, Arm part of an approximate valuation of 64,000 million dollars (close to 59,000 million euros). Should it be a new debut on behalf of artificial intelligence, which has been valued, as denounced by investors on the pages of the FT, also at stratospheric multiples and similar to those of Nvidia, which trades above 190 times its profit.

The president of the company, Masayoshi Son, has managed to double the valuation of Arm in the last seven years since it was acquired in 2016 by SoftBank in an operation that closed at 32,000 million dollars (about 29,400 million euros). . As the company states in its placement brochure, “approximately 70% of the world’s population uses Arm products”. In addition, they point out that “the chips that contain their technology have close to 50% of the market share, with a valuation close to 200,000 million dollars.”

At the end of its 2022 fiscal year, Arm had revenue of $2.7 billion and a profit of $524 million. “We are working with leading companies such as Alphabet, Cruise LLC, Mercedes-Benz, Meta and Nvidia to implement Arm technology to run AI workloads,” he states in the SEC filing.