Giants want a piece of arm, but won’t debut on Nasdaq have a bite?

Earning $20 billion in seven years isn’t bad. It’s enough money to build and equip one of Taiwan’s most advanced microchip production facilities – or to fund the British government’s long-delayed semiconductor strategy 16 times over.

Still, SoftBank’s two-thirds premium on Arm, the chip developer it acquired seven years ago this week for $32 billion and which it has been trying to sell for four years, is far from extraordinary when compared with growth elsewhere Parts of the industry compare.

Over the same period, the PHLX Semiconductor Sector Index has risen more than four-fold, and Nvidia – Arm’s one-time candidate that is wowing investors with its potential to power the age of artificial intelligence – is 30 times more valuable than in 2016.

This IPO, the largest and most watched in London of the year precisely because it is not taking place here, never had to come to a halt. If they just turned them back on, it could be seen as a win for Wall Street investment bankers, who have been starved for hefty transactions and fees.

Still, SoftBank’s magpie-like founder Masayoshi Son hopes the price will rise when Nasdaq trading begins next Thursday, allowing the 91 percent stake he retains to continue to appreciate in value to fund another acquisition spree .

SoftBank’s IPO track record isn’t great, reminding us that difficult new issues are by no means unique to London. The remarkable thing about Arm – which was founded 33 years ago in Cambridge in a joint venture between Acorn Computer, Apple and its manufacturing partner VLSI – is that it doesn’t promise the explosive growth that “Next Big Thing” often promises. But it makes a profit. And the fact that industry leaders all want a piece of the company is a testament to its unique position amid feuding device makers and geopolitical rancor.

The $735 million that the ten companies, including Samsung, Intel, Apple, Alphabet and Nvidia, will invest together is trivial given their cash holdings, but protects their interests. In fact, it’s less than the profit Apple made when it sold its last stake in Arm 20 years ago.

Why are they bothering you? Arm’s secret is a set of rules known as Instruction Set Architecture (ISA), whose few thousand instructions can be configured into four billion possible encodings that determine how a device’s central processing unit (CPU) is controlled by software. It has become an enabling technology, licensed 1000 times per second, with more than 15 million developers designing software. It’s best for the giants to keep their fingers in the pie.

Aside from that, Arm has to satisfy growth-minded investors, which CEO Rene Haas says can still be squeezed out of the stagnant smartphone space, as well as by gaining market share in computer server chip development and the automotive industry.

It was never meant to be like this. To gain approval for the doomed Nvidia takeover, Arm filed a petition with the Competition and Markets Authority, warning that the company should not be left at the mercy of “unsentimental” public markets that undermine “profitability and performance.” would undoubtedly require strategic changes and cost -cutting.

I’m not sure I’d buy something they want 28 banks to sell, but I suspect Arm will be fine. And I’m sure it could have thrived in London. We must learn the lessons of his flight so that our future world champions never have to look abroad for capital.

James Ashton is Managing Director of the Quoted Companies Alliance. His story of Arm, The Everything Blueprint, is published by Hodder & Stoughton.