British Semiconductor designer Arm Holdings is in talks with Nvidia Corporation to bring the world’s eighth-largest corporation in as an anchor investor in its pending debut on the New York stock exchange.
Softbank-owned Arm and Nvidia are wrangling over valuations, according to a report by the FT.
Nvidia wants to buy in with a share price valuing Arm at US$35bn, while Arm's owners are seeking a valuation closer to US$80bn.
Negotiations are ongoing and “might not lead to an investment”.
Last month, Arm was said to be holding talks with several other of its biggest customers and end users about one or more of them becoming an anchor investor in the IPO, according a Reuters report.
Discssions were held with ten Intel Corp, Alphabet Inc (NASDAQ:GOOG), Apple Inc (NASDAQ:AAPL), Microsoft Corp, TSMCo (NYSE:TSM) and Samsung Electronics about potentially investing.
Bringing Nvidia or any other the others on as an anchor investor would support Arm as it transitions out of Softbank’s ownership.
Should Arm successfully list this year, it will likely be the largest IPO in 2023 and the most valuable US listing since electric vehicle maker Rivian in November 2021.
Arm will hope for a better performance than Rivian though; the would-be Tesla rival is down over 80% since its debut.
Arm and Nvidia Corporation’s shared history
Nvidia announced plans to buy Arm for US$40bn in 2020, but competition regulators on both sides of the Atlantic voiced concerns that the combination would hand Nvidia too much power in the semiconductor industry.
Pressure from the Federal Trade Commission in the US and the Competition and Markets Authority in the UK proved insurmountable and the deal collapsed in early 2022.
Softbank and Nvidia said the deal faced “significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties”.
Arm instead pinned its hopes on an IPO. Despite pleadings from British politicians to list in London, Arm decided to pursue a New York listing.
Nasdaq is broadly considered the gold standard exchange for global tech groups, with Arm likely to get a higher valuation there compared to the London Stock Exchange.
“Arm is at the centre of the important dynamics in computing,” Nvidia founder Jensen Huang said at the time. “I expect Arm to be the most important (computer processing unit) architecture of the next decade.”