Arm Ltd. Chief Executive Officer Rene Haas, gearing up for the biggest initial public offering of the year, is pitching investors on a pivot.
His message to potential shareholders is that Arm is poised to become a bigger and more profitable business — not just because of the industrywide boom in cloud computing and artificial intelligence, but also due to a major change in how it operates.
"We made a significant shift in our strategy," Haas said in a video presentation for prospective investors seen by Bloomberg.
For most of its history, Arm's main focus has been designing chips for smartphones and other electronics and then selling that technology for pennies per chip to companies like
Qualcomm Inc. But now, Arm is doing complex design work focused on specific products, tailored for what it sees as key areas of growth. It's a "purpose-built approach" addressing the urgent needs of companies making mobile devices, cloud computing, car electronics and internet-connected technology, Haas said in the presentation.
Getting that message across is key to the lofty valuation. Arm had said it's seeking as much as $54.5 billion in its IPO this week, though it’s proving so popular with investors that the company may
raise the price range for the shares. The listing is oversubscribed by 10 times, and bankers are planning to stop taking orders a day early, by Tuesday afternoon, people familiar with the matter have said. Arm still plans to price its shares on Wednesday, the people said. It's not uncommon for books to close early on an IPO, which often indicates strong demand.
It's a big markup from 2016, when SoftBank Corp.'s Masayoshi Son bought Arm for $32 billion. To bolster the point that Arm really is a different company, the video presentation features endorsements from
Nvidia Corp. Chief Executive Officer Jensen Huang and James Hamilton, architect of much of
Amazon.com Inc.'s AWS hardware, among others.
Huang, in a reference to his failed attempt to purchase Arm for $40 billion in 2022, said the world knows how much he loves Arm and praised Haas' shift into new markets, particularly the artificial intelligence ecosystem. Nvidia, now the most valuable chip company, is backing Arm's IPO and plans to be a strategic investor.
It was Nvidia's unsuccessful pursuit of Arm that led to Haas' overhaul. His pitch for the CEO job — when his predecessor, Simon Segars, stepped down in early 2022 — was that Arm was doing much of the work in defining technology in the mobile phone and computing industries but wasn't being paid or valued accordingly.
