Factbox-SoftBank’s Arm by the numbers By Reuters

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© Reuters. FILE PHOTO: Arm CEO Rene Haas rings the opening bell, as Softbank’s Arm, chip design firm, holds an initial public offering (IPO) at Nasdaq Market site in New York, U.S., September 14, 2023. REUTERS/Brendan McDermid/File Photo

(Reuters) – SoftBank (TYO:) Group’s Arm Holdings soared almost 25% above its Nasdaq debut price on Thursday, valuing the company at $65 billion.

The following are key facts about Arm:

REVENUES

Sales totaled $2.68 billion in the 12 months to the end of March, little changed from $2.7 billion in the prior period due to weak demand for mobile phones during a global economic slowdown.

Its revenue is mainly composed of chip licensing fees and royalty fees, which it started collecting in the early 1990s and accounted for three-fifths of overall revenue in the latest fiscal year.

MAJOR MARKETS BY GEOGRAPHY AND PRODUCTS

Arm’s designs 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.

Arm says it has a 10% share in cloud computing chips, 41% in automotive chips, 25.5% in networking and 64.5% in Internet of Things.

By geography, the United States is the biggest market and generated 41% of its revenue in the last fiscal year, followed by China which accounted for 25%.

CHINA RISKS

Arm China is an independent entity that has exclusive rights to distribute Arm’s technology in the country. That makes Arm China, not better-known names like Apple (NASDAQ:) or Qualcomm (NASDAQ:), Arm’s largest customer.

And this customer has a history of late payments and presents “significant risks” to Arm’s business, according to its U.S. F-1 filing.

Arm China, in which Arm itself is in effect only a minority shareholder, underwent a nearly two-year boardroom battle between its local chief and shareholders that ended last year.

Beyond these internal issues, U.S. sanctions limiting sales to China along with rising competition in the Chinese market cast doubt on Arm China’s long-term trajectory.

SHAREHOLDERS

SoftBank retains a 90.6% stake in Arm following the IPO.

Prior to the offering, Arm signed up many of its major clients as cornerstone investors, including Apple, Nvidia (NASDAQ:), Alphabet (NASDAQ:), TSMC, Advanced Micro Devices (NASDAQ:), Intel (NASDAQ:) and Samsung Electronics (KS:).

These companies’ interest is fuelled 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 investment discussions, as they view Arm’s chip design as an indispensable resource.

VALUATION

SoftBank took Arm private for $32 billion in 2016. Four years later, Nvidia offered to buy Arm in a stock and cash deal that was worth around $40 billion at the time.

The offer was worth more than $80 billion at one point, thanks to a surge in Nvidia share prices, but the deal was scrapped early last year due to regulatory hurdles.

In its latest earnings for the June quarter, SoftBank valued Arm at $45 billion, but two months later, it bought back a 25% stake in Arm that had been owned by SoftBank’s investment vehicle, the Vision Fund, at a $64 billion valuation.

At the IPO, SoftBank achieved a valuation of $54.5 billion, which rose to almost $65 billion after its first day of public trading.

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© Reuters. FILE PHOTO: Arm CEO Rene Haas rings the opening bell, as Softbank’s Arm, chip design firm, holds an initial public offering (IPO) at Nasdaq Market site in New York, U.S., September 14, 2023. REUTERS/Brendan McDermid/File Photo

(Reuters) – SoftBank (TYO:) Group’s Arm Holdings soared almost 25% above its Nasdaq debut price on Thursday, valuing the company at $65 billion.

The following are key facts about Arm:

REVENUES

Sales totaled $2.68 billion in the 12 months to the end of March, little changed from $2.7 billion in the prior period due to weak demand for mobile phones during a global economic slowdown.

Its revenue is mainly composed of chip licensing fees and royalty fees, which it started collecting in the early 1990s and accounted for three-fifths of overall revenue in the latest fiscal year.

MAJOR MARKETS BY GEOGRAPHY AND PRODUCTS

Arm’s designs 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.

Arm says it has a 10% share in cloud computing chips, 41% in automotive chips, 25.5% in networking and 64.5% in Internet of Things.

By geography, the United States is the biggest market and generated 41% of its revenue in the last fiscal year, followed by China which accounted for 25%.

CHINA RISKS

Arm China is an independent entity that has exclusive rights to distribute Arm’s technology in the country. That makes Arm China, not better-known names like Apple (NASDAQ:) or Qualcomm (NASDAQ:), Arm’s largest customer.

And this customer has a history of late payments and presents “significant risks” to Arm’s business, according to its U.S. F-1 filing.

Arm China, in which Arm itself is in effect only a minority shareholder, underwent a nearly two-year boardroom battle between its local chief and shareholders that ended last year.

Beyond these internal issues, U.S. sanctions limiting sales to China along with rising competition in the Chinese market cast doubt on Arm China’s long-term trajectory.

SHAREHOLDERS

SoftBank retains a 90.6% stake in Arm following the IPO.

Prior to the offering, Arm signed up many of its major clients as cornerstone investors, including Apple, Nvidia (NASDAQ:), Alphabet (NASDAQ:), TSMC, Advanced Micro Devices (NASDAQ:), Intel (NASDAQ:) and Samsung Electronics (KS:).

These companies’ interest is fuelled 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 investment discussions, as they view Arm’s chip design as an indispensable resource.

VALUATION

SoftBank took Arm private for $32 billion in 2016. Four years later, Nvidia offered to buy Arm in a stock and cash deal that was worth around $40 billion at the time.

The offer was worth more than $80 billion at one point, thanks to a surge in Nvidia share prices, but the deal was scrapped early last year due to regulatory hurdles.

In its latest earnings for the June quarter, SoftBank valued Arm at $45 billion, but two months later, it bought back a 25% stake in Arm that had been owned by SoftBank’s investment vehicle, the Vision Fund, at a $64 billion valuation.

At the IPO, SoftBank achieved a valuation of $54.5 billion, which rose to almost $65 billion after its first day of public trading.

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