UK tech giant Arm has delayed plans to list early next year amid the global stock market slump.
The Cambridge-headquartered chipmaker, owned by Japanese giant SoftBank, fears potential investors could be put off by the economic downturn, with the UK now officially in recession.
The company, which was delisted from the London Stock Exchange when SoftBank acquired it for £24.3 billion in 2016, wrote to private shareholders to break news of the delay.
“Clearly, we want to IPO as soon as is possible. But given the current global economic uncertainty, given the state of financial markets, that’s probably now unlikely to happen before the end of March 2023,” Ian Thornton, Arm’s head of investor relations, said.
“However, preparations for the IPO are going very well. They’re advanced. And we are fully committed to floating sometime in 2023.”
A float was expected to value the company at up to £34bn. The delay – first reported by the Mail on Sunday and since confirmed by Arm – is bad news for SoftBank following a series of failed big-money investment bets in recent years.
It could also be a blow to Jeremy Hunt’s ambitions for the UK to become a global Silicon Valley, as revealed in the Autumn Statement last week. UK ministers have lobbied Arm to list in London, rather than New York, to boost the UK’s reputation as a potential destination for high-profile tech IPOs.
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Another factor in the decision could be Arm’s poor half-year results to the end of September, with sales down 6.1% to £1.16bn.
The company employs around 6,000 people globally but revealed plans to cut 15% of its workforce following the collapse of its $66bn sale to computing giant Nvidia early this year, which then put IPO on the agenda.
Arm’s processor technology is the world’s most widely licensed and deployed semiconductor design of its kind and is used in virtually all smartphones, the majority of tablets and digital TVs, and a significant proportion of all chips with embedded processors.
The was terminated due to ‘significant regulatory challenges’: it had faced a formal investigation from UK watchdog the Competition and Markets Authority before the UK government instructed the CMA to begin a ‘Phase 1’ investigation into specific considerations around competition, jurisdiction and national security.
That report found concerns over whether, following the takeover, Arm would have an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to Nvidia’s rivals.
Nvidia always said it would retain Arm’s neutrality and keep its IP registered in the UK – but two of Arm’s founders, Hermann Hauser and Tudor Brown, raised concerns of their own around whether the UK firm would remain neutral.