SoftBank rises as chip unit Arm files for Nasdaq IPO

Investing.com -- Shares of Japanese technology conglomerate SoftBank Group Corp (TYO:9984) rose on Tuesday after its unit, chip designer Arm, filed for a long-awaited initial public offering (IPO) on the Nasdaq.

Arm said on late-Monday that it had publicly filed a registration with the U.S. Securities and Exchange Commission (SEC) to list its shares on the Nasdaq Global Select Market, although the firm did not specify how many shares will be issued and at what valuation.

The move comes after several delays in SoftBank’s plans to list the firm, following the implosion of the $40 billion Arm sale to Nvidia (NASDAQ:NVDA), over antitrust concerns.

SoftBank (OTC:SFTBY) had repeatedly delayed the listing, and had only recently provided a timeline on the matter, as the Japanese tech giant seeks to capitalize on a boom in artificial intelligence development in the coming years.

Arm is expected to benefit from this boom, given that its designs are used in chips by several major tech giants including Apple Inc (NASDAQ:AAPL) and Nvidia. The firm receives royalties from every chip sold by its customers.

SoftBank’s shares rose as much as 3%, also helping spur a 0.7% gain in the Nikkei 225. Arm’s listing heralds a shot in the arm for the tech giant, which has been otherwise struggling with a sharp drop in the valuations of its tech holdings over the past year.

SoftBank clocked six straight quarters of losses as rising interest rates battered the value of its tech holdings. Arm had remained among the few bright spots in SoftBank’s portfolio, although the chip designer also swung to a loss in the second quarter.

Arm’s listing comes at a time when several major chipmakers have warned of a cyclical downturn for the industry, with chipmaking giant Taiwan Semiconductor Manufacturing (NYSE:TSM) recently warning that a boom in AI demand may be insufficient to offset a broader decline.

Still, the firm’s listing is expected to provide SoftBank with more capital. Recent Reuters reports said that SoftBank plans to sell about 10% of Arm’s shares in the planned IPO, and that it is seeking a valuation of between $60 billion and $70B for the unit.

SoftBank also recently bought back a 25% stake in Arm from its Saudi-backed Vision Fund.