Major customers of SoftBank Group's Arm Holdings have agreed to invest in the chip designer's initial public offering, sources said.
The companies include Apple, Nvidia, Alphabet and Advanced Micro Devices, according to the sources.
Intel, Samsung Electronics, Cadence Design Systems and Synopsys have also agreed to participate as investors in the offering, the sources added. Talks with more prospective investors continued.
Amazon.com has decided not to participate, one sources said.
Apple, Nvidia and the other investors have agreed to invest between $25 million and $100 million each in the IPO, the sources said. Arm and SoftBank have set aside 10 per cent of the shares to be sold in the IPO for its clients, Reuters reported.
SoftBank, which acquired the UK-based Arm in 2016, is looking at a valuation of between $50 billion and $55 billion, Reuters said on Friday. Arm's clients have agreed to invest in that valuation range, the sources said.
Arm is considering pricing its shares on September 13, and the stock will start trading the next day, Bloomberg said last week. The roadshow to promote the offering is expected to come after the US Labour Day holiday on Monday.
The show of support from some of the tech industry’s biggest names will help bolster the offering, which is expected to raise $5 billion to $7 billion.
While it is possible that demand for Arm's shares will lead to a higher valuation by the time the IPO prices, the move represents a climbdown from the $64 billion valuation at which SoftBank acquired the 25 per cent stake in the company it did not already own from its $100 billion Vision Fund last month.
A rush among Arm's clients, comprising the world's biggest technology companies, to snap up shares in the IPO is testing the semiconductor designer's adherence to not picking sides in the chip industry.
The interest is fuelled by a desire by companies to expand their commercial relationship with Arm and make sure rivals do not gain an edge, Reuters reported.
A successful debut by Arm would also be a boon for SoftBank chief executive Masayoshi Son, whose Vision Fund lost a record $30 billion last year. It could also spur dozens of companies to pursue their own IPO plans.
While an investment in the IPO would not come with a seat on Arm's board or ability to dictate strategy, it could strengthen ties with each participating company and make it harder for a competitor to acquire Arm later.
Arm and SoftBank did not respond to requests for comment.
AMD, Intel, Synopsys and Nvidia declined to comment. Alphabet, Amazon, Apple, Samsung and Cadence did not respond to requests for comment. The Wall Street Journal reported on Arm's valuation target on Friday.
