Chip designer Arm, owned by Japan's Softbank, filed for Nasdaq listing on Monday in preparation for the biggest U.S. Initial Public Offering (IPO) in nearly two years.

The company is now on track to become the most valuable firm to complete a U.S. IPO since at least November 2021. At the time, it was electric car manufacturer Rivian that listed with an initial market capitalization worth $70 billion.

Arm Preparing for Biggest US IPO in Last 2 Years

The Japanese company Softbank, which is led by Masayoshi Son, was able to acquire UK-based Arm in 2016 for $32 billion. The filing on Monday confirmed that there has been an internal transaction that happened earlier this month between Softbank Group and its Vision Fund, which is an investment vehicle, that valued Arm at $64 billion.

Additionally, the prospectus reveals that the chip designer has continued to depend on China for nearly a quarter of its revenues. The situation comes at a time when United States President Joe Biden's administration is increasing restrictions on U.S. semiconductor companies' activities in the Asian nation, as per the Financial Times.

Arm's business in the Asian country is run through a local company that neither it nor Softbank has control over. The company's product designs also have a near-monopoly on the chips at the heart of every smartphone and it has a market share of over 99%.

In a filing, the firm said that they estimated that roughly 70% of the global population uses Arm-based products. The statement added that the chips that contain its technology had a 49% share of a total addressable market that is worth a little more than $200 billion last year.

But the latest decision means that Arm is returning to the public markets after being gone for seven years. It comes at a time when the smartphone market is starting to experience its largest slump in the past decade.

The development also comes as Arm reported $524 million in net income on $2.68 billion in revenue in its fiscal 2023, which ended in March. The company's 2023 revenue was also seen to have gone slightly down from sales in 2022 worth $2.7 billion, according to CNBC.

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Near-Monopoly on Chips

Arm chips are manufactured by various companies, including Amazon, Alphabet, AMD, Intel, Nvidia, Qualcomm, and Samsung. The technology is also being utilized in Apple's chips for its iPhone products.

The company noted that its technology was used in more than 30 billion chips that were shipped during its fiscal 2023. Typically, Arm takes a fee on every single chip that is shipped using its technology.

Bernstein analysts disputed Softbank's valuation of Arm and estimated the latter's market value to be roughly $40 billion based on preliminary analysis of the limited financial information available at the time.

Currently, it remains unclear whether or not Bernstein will revise that estimate following the financial formation revealed in Arm's F-1. In 2020, Arm agreed to sell itself for $40 billion to chipmaker Nvidia, a deal that was called off in February 2022 due to "significant regulatory challenges," said TechCrunch.

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