Arm Holdings not suitable for IPO, says report commissioned by Nvidia

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British chip innovator Arm Holdings PLC should not return to a public listing even if a takeover by Nvidia Corporation is blocked by regulators in Europe and the UK.


This is one of the conclusions from a research report commissioned Nvidia, which is facing objections to the US$40bn (GBP29bn) deal from other chip manufacturers and designers.


The Cambridge-based outfit has been owned by Softbank, the Japanese investment giant, since a GBP24bn take-private deal in 2016.


Since then, according to a report from Future Horizons, Arm has not kept up with rivals and is “stuck in the mud” due to a lack of proper investment.


The chip industry analysts said under Softbank the chip designer is doing well in smartphone end markets but losing ground in markets such as data centres and connected cars.


“With stagnant revenues and no profits, time is not in Arm’s favour and funding the required increased levels of R&D spending will clearly be a business and financial leap of faith. Arm does not have the financial firepower to self-fund this from revenues,” said the report, which was reported in the Telegraph.It said that Arm has enjoyed little success from a push into the “internet of things” despite hiring thousands of employees.


Future Horizons said a publicly listed Arm would be unlikely to raise enough money to catch up with rivals.


In the UK, culture secretary Oliver Dowden is mulling whether to refer the Nvidia deal to competition authorities for a full investigation, with European regulators also yet to begin their probe.

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