It Powers 99% of Phones,
Yet Its Own Listing Pays It Nothing

In September 2023, Arm Holdings plc filed its final prospectus to list on Nasdaq. Because it is a UK company, its registration document is a Form F-1 — not the U.S. S-1 — and the final, post-pricing version is a Form 424B4. This article reads only the facts written in that prospectus. Arm CPUs sit in more than 99% of the world’s smartphones, and more than 250 billion chips have run on Arm designs. About 70% of the world’s population uses an Arm-based product. It is, literally, the foundation of computing.

But the prospectus holds an oddity. Arm sold no new shares in the IPO; every ADS offered is existing stock held by its parent, SoftBank. In other words, Arm itself receives nothing from this offering.

The IPO price is $51.00 per ADS, and the base offering is 95.5 million ADS. The proceeds — about $4.77 billion, after underwriting discounts and before expenses — go entirely to the selling shareholder, SoftBank. According to the prospectus, SoftBank still holds about 90.6% after the listing (89.9% if the underwriters exercise their option to buy additional ADSs in full). Of a company worth about $52 billion, only roughly a tenth floats.

And Arm does not control Arm China, the largest customer that generates 24% of its revenue. A company at the summit does not touch its own IPO, and cannot hold even its own lifeline. Across ten questions, we lay out that structure.

Ten questions. We lay out only what the F-1 / 424B4 says.

Question 1

What is this company, really?

In one line: a company that licenses blueprints centered on the CPU.

Arm makes not a single chip. What it makes is the blueprint (IP) centered on the CPU (the central processing unit, the brain of a computer), along with related technology such as GPUs, System IP, and development tools. It licenses these to semiconductor firms and OEMs such as Apple, NVIDIA, Samsung, and Qualcomm.

By analogy, it is not a company that builds houses but one that draws the blueprints sold to builders around the world. Arm owns no factories and no inventory; it earns on the licensing fees for its designs.

The reach of those blueprints is staggering. More than 99% of the world’s smartphones carry an Arm-based CPU. Cumulatively, more than 250 billion chips have run on Arm designs.

From sensors to supercomputers, Arm CPUs run most of the world’s software. Phones, tablets, PCs, data centers, cars, smartwatches, thermostats, industrial robots. The company estimates that about 70% of the world’s population uses an Arm-based product.

In the single fiscal year ended March 2023, more than 30 billion Arm-based chips (30,583 million) shipped — an increase of about 70% over the fiscal year ended March 2016.

Why did one blueprint spread this far? The answer is the instruction set. Arm holds the standard for how a CPU speaks when it runs software.

Arm has honed this standard since 1990. It broke into mobile phones on the single point of power efficiency and became the heart of the smartphone revolution. Ever since, Arm’s designs have held the position of moving the world without making anything.

No chip factories — a company that moves 99% of the world on licenses and royalties.

Question 2

What does it compete on?

Arm’s moat is built from three layers.

Control of the instruction set — a common tongue

The standard a CPU follows when it runs software is called the instruction set architecture (ISA). Arm holds the de facto world standard among CPU instruction sets. Apps and operating systems the world over are written to Arm’s way of speaking, and switching to another standard means the heavy burden of porting, recompiling, and verifying that vast body of software.

That becomes the wall that blocks switching. Arm describes itself as the world’s most widely used CPU architecture. The moat is not the moment of creation but the thickness of time over which the world’s software has been stacked to fit it.