The smartphone market slump has dragged down this year's largest IPO, with Arm's annual revenue declining by 1%.

Arm, a chip design company from the UK, is preparing to go public on the US stock market. If this IPO is successful, Arm will become the largest IPO company this year.

According to the draft documents submitted by the company to regulatory agencies, Arm's revenue for the previous fiscal year decreased by about 1%.

Usually, during an IPO, companies hope to demonstrate a steadily increasing performance over the past few years to regulatory agencies and investors. However, according to the draft documents, the company's operating revenue for the 12 months ending March 31 of this year decreased to $2.68 billion. SoftBank Group, Arm's parent company, plans to conduct the IPO as early as next month, which could potentially value the chip design company at $70 billion.

In May of this year, SoftBank stated that Arm's revenue grew by 5.7% in the latest fiscal year according to international standards.

It is worth noting that the documents submitted by Arm to US regulatory agencies adopt US accounting standards, while SoftBank's documents use international standards.

Apart from other differences, US accounting rules and international financial reporting standards also differ in terms of when to recognize revenue.

Currently, the global chip industry is still recovering from a sales decline caused by excess inventory, especially in the smartphone market, which is also Arm's most important market. One of Arm's largest partners, Qualcomm, disappointed investors with its latest quarterly forecast earlier this month, leading to a sharp drop in its stock price. Even demand for Apple's iPhone has slowed down.

Arm's draft documents also show that according to US standards, quarterly operating revenue for the period ending June 30 decreased by 2.5% to $675 million. This is a smaller decline compared to the decrease reported by SoftBank earlier this month, when SoftBank stated that sales in this segment decreased by about 11% to $641 million according to international financial reporting standards.

Arm's designed technology includes microprocessors, and its intellectual property is used in almost every smartphone in the world.

According to sources cited by the media, the documents may be made public as early as Monday. One insider added that it will provide detailed information on how SoftBank acquired a 25% stake in Arm from the Vision Fund for $6.4 billion.

In this IPO, Arm is expected to sell approximately 10% of the company's shares.

SoftBank recently acquired a 25% stake in ARM from the Vision Fund, valuing ARM slightly above $64 billion, which falls within the range of $60-70 billion disclosed by the media earlier this month.

The transfer of ARM's equity from the Vision Fund to SoftBank indicates that SoftBank hopes to achieve a valuation of even more than $64 billion through ARM's IPO. This puts pressure on SoftBank. Previously, there were reports that ARM executives hoped the valuation could reach $80 billion, but there is uncertainty as to whether this goal can be achieved.

SoftBank acquired ARM for approximately $32 billion in 2016. Subsequently, SoftBank sold 25% of ARM's shares to the Vision Fund for $8 billion. The "Vision Fund" is mainly funded by Middle Eastern investors, including the Saudi Arabian Public Investment Fund and the Abu Dhabi Investment Department's Mubadala Investment Company. SoftBank has only invested about $28 billion in the $100 billion Vision Fund. Therefore, SoftBank's purchase of ARM shares from the Vision Fund is actually buying back shares from Middle Eastern investors.

With this purchase of ARM shares, the Vision Fund's ARM holdings have achieved approximately double the performance. This is a rare victory for the fund, which had previously failed to meet expectations.

Under the leadership of Masayoshi Son, SoftBank has been seeking to sell its investments for the past two years in order to raise cash to repay debt. In 2021, NVIDIA attempted to acquire ARM for $40 billion, but failed due to regulatory obstacles. Since then, SoftBank has been fully committed to promoting the ARM IPO.