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Arm IPO to kick off today
- adolph 3y agoAs an IP holding company for an ISA, how is Arm Limited different from any other patent troll? https://www.arm.com/glossary/isa https://www.arm.com/glossary/isa https://www.theregister.com/2023/08/31/a_star_star_domains/ https://www.theregister.com/2023/08/31/a_star_star_domains/ https://www.theregister.com/2023/09/12/arm_markstedter_domain/ https://www.theregister.com/2023/09/12/arm_markstedter_domai...
- codazoda 3y agoThis feels different to me because Arm is designing these chips. It feels a bit more like a drafting company who draws plans but doesn’t build anything. They don’t just have some loosely defined patent. The linked articles are about the brand name, Arm, used in a domain. You wouldn’t put “intel” or “nvidia” in your domain name without drawing attention. Maybe we need a moniker similar to x86 to define the arm architecture more generally.
- deelowe 3y agoI would add to this that people who make statements like the parent did are woefully ignorant of how the industry really works. Board producers rarely design the entire PCB. PCB designers rarely produce the board. Chip designers rarely produce their chips. Chip producers often do some portion of the design process. And on and on. Computing is a complex business and few companies do everything in house. ARM's business model of focusing solely on the IP seems to have worked well for them. From the engineering side, it's certainly nice to have the ability to pick and choose which IP blocks we'd like to use and then shop around the design ourselves versus having to battle with Intel to get what we need while trying to poke through the various layers of obfuscation they tend to put in place.
- uxp8u61q 3y agoBoth cases you link to are about trademarks. Patents and trademarks are unrelated. "Patent troll" has the connotation of an organization or individual who buys cheap patents and sue other organizations on mostly bogus claims related to these patents, hoping that the other side won't want to bother and just settle the matter. That's not Arm's business model.
- deleted 3y ago[deleted]
- deelowe 3y agoPatent trolls patent things that already exist in some form and then seek to extract revenue through the legal system. You can't call a company that literally developed the IP they patented "trolls."
- The_Colonel 3y agoThey don't just hold the patents, but actively develop the ISA / designs too. ARM doesn't have a big enough moat to stay static and just troll. There are competing ISAs, some free, and there isn't as big of an lock-in as for e.g. x86.
- devnullbrain 3y agoIf anyone replying to this needs you to define ISA for them, their input isn't very useful.
- chmod600 3y agoThe links you provided are about copyright and trademark law, not patents.
- throwaw12 3y agoisn't it slightly high for ARM? what is fair value for them?
- wredue 3y agoTech valuations are all fairies and unicorns right now. I don’t know what their “actual fundamentals” valuation should be, but actual fundamentals haven’t dictated tech stock pricing for at least a decade.
- ShroudedNight 3y agoI thought the substantial increase in interest rates mostly pissed away the fairies and unicorns, and people needed to prove they made real money now.
- wredue 3y agoNVDA is up 200% YTD and was already massively overvalued at the start of the year. Others do seem to be backing off, but there is still definitely a lot of way overvalued tech out there.
- linuxftw 3y agoNVDA forward PE is 42.48, which isn't super crazy relative to other big tech companies (MSFT over 30). I suspect ARM's forward PE is double that ratio (>80). If NVDA's forward projections are correct, and they can maintain that same growth, then there is still room for upside. Personally, I'm not playing this game of musical chairs because I don't think these valuations are sustainable, but as they say, the market can stay irrational longer than you can stay solvent, so shorting is a terrible idea.
- wredue 3y agoPricing stocks today at what a company might be worth in 10 years is pretty much fairies and unicorns. Other sectors do not price in the way tech does.
- deleted 3y ago[deleted]
- itsoktocry 3y ago50 terrible investments by Softbank possibly recouped in a single IPO. Crazy world.
- boringg 3y agoI don't think that's the case here. "At this price, the IPO is reportedly set to raise about $4.9 billion for Arm’s parent company, Softbank, which is less than the $8-$10 billion the Japanese investment outfit had previously said it hoped to generate. Softbank itself posted a record $39 billion loss earlier this year."
- samwillis 3y agoOur first family computer was an Acorn Archimedes, we had it for maybe a year before it was replaced by a PC with an Intel. Now here we are 30 years later and I'm typing on a laptop running on a ARM (née Acorn RISC Machines, then Advanced RISC Machines), I have an ARM in my pocket, another in a tablet in my bag. My wife is next to me on an ARM laptop, she's also got an ARM on her arm... we're listening to music on a wifi speaker running on an ARM. There are probably 30-40 ARMs in one way or another around our house. Amazing really.
- deepspace 3y ago> Acorn Archimedes Newb /s I cut my teeth on an Acron Atom in 1982, and upgraded to a BBC Micro (a renamed Acorn Electron) the next year. But, yes, I never would have thought that, 40 years later, most of the CPUs in my house would still be derived from that scrappy British's company's designs.
- downrightmike 3y agoApple bought out Acorn and used them to design their chips.
- monocasa 3y agoI wouldn't go that far. Apple's strategy in a lot of cases is more like that of automobile manufacturers where they invest heavily in a company as sort of a king maker, but then hold them over a barrel on later margins with the threat that they can make another king. That's what they did with TSMC, pre purchasing chips to the tune of ~$15B which allowed TSMC to go ahead and buy a bunch of the first EUV steppers.
- sneak 3y agoTechnical question: why do people need ARM licenses? Surely you don't need anything from them to design a chip from scratch that implements the same instruction set, as Cyrix and AMD famously did to the ia32. Are the licensees using parts of the actual chip design? Are their own designs too far down the "derivative work" rabbit hole due to not being cleanroomed that they have no hope of ever not licensing? What are the specifics?
- actionfromafar 3y agoCyrix and AMD licensed tech from Intel back then.
- sneak 3y agoInteresting, I didn't know that. Why would Intel do that? What is the legal interpretation of IP law that says you need permission to design a chip that implements an ISA?
- ip26 3y agoIntel licensed x86 to provide a credible second source, which they needed for some of their early business deals.
- papercrane 3y agoFor AMD the primary driver was IBM. In order to get the contract for the IBM PC, Intel had to agree to have a second-source manufacturer for their CPUs. Intel already had a relationship with AMD so it made sense to use them.
- actionfromafar 3y agoPatents, lots of patents. A lot of them are expired. By now you could make an 80486 and I guess also a Pentium clone without worrying about patents. But there can also be patents on how you make something performant on modern silicon, so it's not only about the ISA.
- papercrane 3y ago
- bhouston 3y agoThe strategy they are using to establish a revenue stream that justifies this valuation is to continue to raise prices on their customers. I think this works in the near term (next 5 to 10 years), and generate a ton of money for ARM, but it will drive additional momentum to RISC-V. The legendary Jim Keller is going all in on RISC-V, if you don't know Google him. His company has many core designs coming as well chiplets: https://tenstorrent.com/risc-v/ https://tenstorrent.com/risc-v/ Because of Jim Keller and similar efforts I wouldn't be surprised for RISC-V to see both core count as well as per core performance meet ARM over the next few years. Maybe even exceed if Jim can push the chiplet approach faster than ARM can roll theirs out. Hopefully this drives a lot of innovation and we all benefit as a result. I think that using ARM is going to be viewed as being locked into ARM's ever increasing licensing fees, where as if you go RISC-V, you are free to switch CPU providers.
- devnullbrain 3y agoSoftbank has spent 7 years and a CEO finding out how difficult just raising prices is.
- boringg 3y agoEspecially when your lifeline is tied to Apple. No way are they going to negotiate to raise prices in a meaningful way against their largest client. Actually> "Apple (AAPL.O) has signed a new deal with Arm for chip technology that "extends beyond 2040," according to Arm's initial public offering documents filed on Tuesday."
- scrlk 3y agoApple was one of the founding investors of ARM back in 1990 - it's likely they have an extremely generous licence and pricing terms as a result.
- xadhominemx 3y agoApple’s involvement with ARM’s founding has zero impact on their negotiations or pricing.
- 1-6 3y agoARM IPO will make it another patent house like Qualcomm.
- jamesblonde 3y agoIt was disappointing for the UK not to get a dual listing, despite Rishi Sunak's best attempts. I guess Europe is just not attractive enough for capital from the rest of the world for IT investments. https://www.theguardian.com/business/2023/mar/03/uk-chip-designer-arm-chooses-us-only-listing-in-blow-to-rishi-sunak https://www.theguardian.com/business/2023/mar/03/uk-chip-des...
- binarymax 3y agoIs LSE Europe though? Perhaps pre-Brexit it would have been a more obvious choice.
- steve1977 3y agoIt is Europe, but not EU
- dom96 3y agoWhat would be the point in a dual-listing? How does one actually work?
- jamesblonde 3y agoIt would mean you can buy and sell ARM shares on more one stock exchange. One basic rule for making money as a country is to ensure capital flows through your country (e.g., services, manufactured goods, FDI, etc). Then skim off some of the captial that flows. If ARM were listed in the UK and say, $30b of shares is traded anually, of which say $10b is in the UK, then some of that will go to UK ltd.
- pc86 3y agoWhat incentive would ARM have to do that, though? Just so the UK can "skim off some of the capital" (which is a very generous way of describing what's actually occurring).
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- intrasight 3y agoI've read that some big tech names are anchoring this IPO: Apple, Google, NVidia. What's in it for them? Or are they getting a sweetheart deal on their shares of Arm?
- SkyMarshal 3y agoThey don’t appear to be saying, but the investment makes sense for Apple and Google even without a sweetheart deal. It ensures a successful IPO and continuing viability of their primary chip supplier, and protects it from a takeover by some entity hostile to Apple or Google. Nvidia I’m not sure about though.
- coder543 3y agoNvidia has been selling ARM chips for years (the Nintendo Switch’s SoC, for example), and they’re currently in the process of massively growing their ARM business with the new Nvidia “Grace Superchips”. Not to mention the expected sales boom of the new Switch 2 SoC that should happen within about a year.
- 01100011 3y agoProbably a pump-n-dump onto retail investors to make a quick buck... or they're paranoid and want to retain enough ownership to have some say in the future direction of the architecture... or both.
- therealcamino 3y agoThey don't want a competitor to control ARM.
- Keyframe 3y agoWould it be possible now for Nvidia to move onto a hostile takeover? Or any form of takeover is done due to regulatory decisions?
- idontwantthis 3y agoNot as long as SoftBank owns 90% of the shares.
- lotsofpulp 3y agoWhy would that be relevant? SoftBank wanted to sell to Nvidia, but the government did not stop the sale just because SoftBank owned it.
- idontwantthis 3y agoBecause they would need to sell those shares for there to be a takeover.
- lotsofpulp 3y agoBut they already wanted to sell their shares to Nvidia before, what would have changed now? They want to reduce their ownership of ARM, hence them doing an IPO in the first place.
- disgruntledphd2 3y agoThe regulators would stop it like they did last time.
- pc86 3y agoRegulators stopped a coordinated purchase, which they are totally within their right to do. And if Softbank and NVIDIA try to coordinate a purchase another way, they'll stop that too. It's not as cut-and-dry if Softbank just puts the shares on the open market, and NVIDIA pays market value for them. Are there reporting requirements around NVIDIA buying stock on the open market? Freeze-out periods? Regulatory delays? If there's collusion it might be a crime but even if you're cynical and refuse to believe that there might not be, you still have to prove it.
- pkcsecurity 3y agoComment on the timing of this IPO: for a company to IPO "unfavorably" compared to previous valuations likely means ARM's hand was forced by timing considerations, unless they are running out of cash, which I don't think is the case. My interpretation of this is that their investors suspect that whatever boost ARM is getting from AI optimism will likely peak soon, so the timing has to be now. I know that's not fully rational because they're mostly unrelated, but certainly the optimism because of AI has to be good for them. Curious to see if this "signal" plays out - investors tend to be pretty savvy about timing.
- dilyevsky 3y agoArm itself may not be running out of cash but their major investor might be looking to cash out
- lotsofpulp 3y agoARM was wholly owned by SoftBank. They did not have their own cash, it was all Softbank’s cash. And obviously SoftBank selling ARM means SoftBank wants to cash out, for whatever reason.
- pokerhobo 3y agoSoftBank made a ton of stupid investments like WeWork and was bleeding money. They needed to cash out their ARM investment to recoup major losses.
- monocasa 3y agoIn fact, SoftBank is known for being the one of the stupidest big investors there is. They got lucky being an early investor in Alibaba, but have managed to piss most of that money away on getting left holding the bag on the peak.
- jsnell 3y ago> I know that's not fully rational because they're mostly unrelated, but certainly the optimism because of AI has to be good for them. Curious to see if this "signal" plays out - investors tend to be pretty savvy about timing. The "investors" are SoftBank; they've been pretty much the stupidest money in the world for years. While it's possible that they're being more savvy about the timing of this sale than about their investment decisions, I don't know that it should be the default assumption.
- anonymousiam 3y agoBought some earlier and it's already up 20% today.
- seabass-labrax 3y agoWhat I would like to know is why ARM - or its owners - needs the cash. Are there any major projects they are undertaking that justifies this flotation?
- mise_en_place 3y agoI wonder how well SoftBank did with this IPO. If it was a decent enough return, I’d say it’s good news for new SoCs and chipmakers that want to innovate.
- xyst 3y agoAnybody buying ARM stonk at IPO price will be bag holding. $54B valuation is insane
- sharedbeans 3y agoI remember reading that ARM makes more money from embedded than they do from mobile, but I can’t find this source any more. Does anyone know anything about this? Was this true in the (recent) past but no longer true?
- goodmachine 3y ago"With the financial world anxiously awaiting the start of Arm’s roadshow in the hopes that Son can reignite the flaccid IPO market, Son has decided that his chip-maker is worth $64 billion because Son agreed to buy a chunk of it from Son for that price. In so doing, Son agreed to pay Son twice what Son sold it to Son for six years earlier." https://doomberg.substack.com/p/arms-length https://doomberg.substack.com/p/arms-length
- incognition 3y agoLike they say, cash is king
- SilverBirch 3y agoI've said it before, and I'll say it again: the weird self-dealing and tiny float that softbank are going for indicate a strong chance that this is going to fall through the floor. Softbank should've learned by now, you can bully the market when you're buying, but you can't bully the market when you're selling. I'd be surprised if this stock weren't down 50% within 12 months. There's too much sell pressure from Softbank and there's no buy pressure.
- lvl102 3y agoBut they have strong support from the likes of Apple to keep ARM independent.
- incognition 3y agoBuy pressure from the ibanks on the tombstone
- FredPret 3y agoHere's a list of companies that can be bought for $50b: Valero Energy. Profit: $10b. [valustox.com/VLO] DR Horton home builders. Profit: $5b. [valustox.com/DHI] General Motors (!). Profit: $10b. [valustox.com/GM] Aflac Insurance. Profit: $5b. [valustox.com/AFL] Nucor steel. This one is selling for only $40b. Profit: $5.6B. [valustox.com/NUE] Microchip Technology Inc. Also $40b. Profit: $2.4b. [valustox.com/MCHP] Arm has it's work cut out to raise their profits from the rumored $1b. I'm not sure why an investor would consider them without a strong plan to 10x-100x their profits when there are companies selling at a similar rate but making much more money in boring product categories. Hope they can do it while staying true to their mission.
- alberth 3y agoWhy are Arm's expenses so high? They don't manufacturer anything, correct?
- FredPret 3y agoThose big-brain chip architects aren’t free! I don’t know anything about Arm’s business interals, but I think they have more of a low-revenue problem than a low-margin problem. According to [0] they had 2.5b in revenue and 0.5b in profit. A healthy margin, and much lower revenue than the other companies I mentioned. [0] https://www.barrons.com/articles/arm-stock-price-ipo-caf090b5 https://www.barrons.com/articles/arm-stock-price-ipo-caf090b...