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In a strategic move that underlines the growing significance of Arm Ltd in the realm of cloud computing, Amazon.com Inc. (AMZN.O) is reportedly in discussions to become a cornerstone investor in Soft Bank Group Corp's (9984.T) Arm Ltd ahead of its impending initial public offering (IPO), as disclosed by sources familiar with the matter on Tuesday.
The potential involvement of Amazon in Arm's IPO, a development not previously reported, draws attention to Arm's pivotal role in cloud computing.
This becomes even more apparent as Amazon Web Services, the tech behemoth's cloud division, has been actively producing its own processing chip, Graviton, built upon Arm's design framework.
The anticipated Arm IPO is slated for early September and is expected to occur on the Nasdaq.
Sources have indicated that Arm aims to secure an impressive funding range of $8 billion to $10 billion, according to previous reports by Reuters.
When approached for comments, representatives from both Arm and Amazon declined to provide any official statements.
Recent reports reveal that Arm has been in communication with around 10 technology companies, including industry giants like Intel (INTC.O), Alphabet Inc. (GOOGL.O), and Nvidia Corp. (NVDA.O), to explore potential investments ahead of its public listing.
It is important to note that these prospective investors will not gain any board representation or control within the company.
Instead, Arm is banking on securing cornerstone investors to forge stronger bonds with its key clients and bolster the IPO's overall appeal, as one of the insiders shared.
SoftBank, the parent company of Arm, is eagerly eyeing the forthcoming IPO as a much-needed boost to its financial outlook. The conglomerate has been grappling with the revival of its Vision Fund after several of its investments in technology startups faced challenges.
The path toward an IPO for Arm was carefully charted by SoftBank following the collapse of a $40 billion deal to sell the chip design firm to Nvidia last year, prompted by objections from regulatory bodies in the U.S. and Europe.
Since then, Arm has exhibited resilience, particularly due to its strategic focus on data centre servers and personal computers, resulting in enhanced royalty revenues compared to the broader chip industry.
While the negotiations continue to unfold behind closed doors, the technology industry and investors are closely watching the developments surrounding Arm's IPO.
The potential inclusion of Amazon as a cornerstone investor is a testament to Arm's influence in cloud computing and a strategic move that could shape the technology market landscape.