Apple in talks to invest in Arm’s IPO in chip influence tug of war

Arm Holdings Ltd’s clients are angling to snap up shares in its initial public offering (IPO), putting the semiconductor designer’s adherence to not picking sides in the chip industry to the test. Customers of Arm that have held talks about taking a piece of the IPO include Apple, Amazon, Intel, Nvidia, Alphabet, Microsoft, Samsung Electronics, and TSMC.

Milana Vinn, Anirban Sen, and Stephen Nellis for Reuters:

Arm is hoping for a valuation of up to $70 billion in the IPO, which will launch on the Nasdaq next month.
These companies’ interest is fueled by a desire to expand their commercial relationship with Arm, and make sure that their rivals do not gain an edge, according to people familiar with the discussions.
This is because Arm’s customers view its semiconductor designs as an indispensable resource. They are used by more than 260 technology companies to make over 30 billion chips annually, powering 99% of the world’s smartphones and everything from the tiniest of sensors to the most powerful supercomputers.
While an IPO investment would not come with a seat on Arm’s board or ability to dictate strategy, it could strengthen ties with each participating company and make it harder for a competitor to acquire Arm later, according to the sources.
Arm and its owner SoftBank Group have set aside 10% of the shares to be sold in the IPO for its clients, the sources said… The details of the IPO discussions between Arm and its clients, which have not been previously reported, illustrate how the company’s neutral status as “the Switzerland of chips” remains a flash point.
[One] of Arm’s major customers in talks to invest in the IPO is Apple. It was part of a consortium that founded Arm in 1990, and has been using its technology for chips that power its iPhones and Mac computers. Its close relationship with Arm has helped it design chips that curbed its reliance on Intel as a supplier.

MacDailyNews Take: We trust Apple will do whatever need to be done to maintain, if not strengthen, its influence in regard to Arm.
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A $70 billion valuation would put Arm at No.115 on the list of the largest public listed companies in the S&P 500 index ranked by market value, just ahead of Northrop Grumman.
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