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It’s no secret that Arm’s announcement to go public this September has garnered widespread attention from other major tech giants. Now, in a recent development, Apple, Samsung, Nvidia, and Intel are reportedly looking towards acquiring stakes in Arm.
Why is Arm this important?
Although at first glance, it may seem like Arm is just another tech company, the company’s role is pivotal as it specializes in licensing chip designs to a range of businesses. This approach not only relieves companies like Apple and Samsung from the burden of chip design but also enables customized solutions such as the M1 chip. Globally, Arm’s chips power over a staggering 250 billion devices and also constitute over 90% of the smartphone chip market.
When it comes to finances, the company achieved sales of $2.8 billion in fiscal 2022, reflecting an astonishing 70% surge compared to figures from its fiscal year 2016 when the acquisition by SoftBank Group concluded.
Arm’s strategic approach
In an effort to stable stock performance upon listing, Arm plans to allocate “a few percent each” in stakes to select companies like Apple and Samsung. This strategy aims to mitigate potential early trading volatility and pave the way for sustained growth in the company’s market value.
“We have diversified our business by not only developing different products but also by addressing it through different parts of the business model strategy. We knew our business was going to be okay. All of the financial results you are seeing now, which are terrific and the team has done a fantastic job on, really come from work that was done a few years ago,” said Arm CEO Rene Haas.
However, Arm’s path will not be without challenges as other companies, including Qualcomm and NXP Semiconductors, embark on their own ventures to develop a competing chip architecture called RISC-V. Additionally, Arm could encounter difficulties within the current economic landscape, where IPO values experienced a significant two-thirds drop in 2022.
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