Amazon weighs anchor investment in Arm amid IPO

Amazon, the tech giant, is reportedly in discussions to become a key investor in SoftBank Group Corp’s Arm Ltd as it prepares for its anticipated initial public offering (IPO), according to sources familiar with the matter.

This undisclosed potential partnership with Amazon highlights Arm’s crucial role in the realm of cloud computing. Amazon Web Services (AWS), the conglomerate’s prominent cloud division, has already developed its own processing chip called Graviton, utilising Arm’s design.

Arm’s IPO, projected to occur in early September on the Nasdaq exchange, has garnered significant attention. The company aims to raise funds in the range of $8 to $10 billion.

Discussions regarding investment ahead of the IPO have been extended to approximately ten technology firms, including Intel, Alphabet, and Nvidia. Importantly, these potential investors are not expected to gain substantial board representation or authoritative control.

The move to engage cornerstone investors aligns with Arm’s strategy to strengthen connections with key clients, thereby enhancing the overall appeal of the upcoming IPO.

The significance of this IPO extends to SoftBank Group Corp, which is currently working to revitalise its expansive Vision Fund after several technology startup investments did not yield anticipated results.

Notably, SoftBank’s aspiration to list Arm has persisted since the proposed $40 billion sale of the chip design firm to Nvidia encountered obstacles last year due to regulatory opposition in the United States and Europe.

Arm’s business prospects have taken a comparatively favourable turn as its emphasis on high-earning data centre servers and personal computers has allowed it to outperform the broader chip industry, resulting in increased royalty payments.

Both Arm and Amazon have refrained from commenting on reports of Amazon’s potential involvement in Arm’s IPO.