Arm

• A blockchain token designed to track the price of Arm Holdings plc (NASDAQ: ARM).

• It is not a share. Holding the token does not confer ownership of the company, voting rights, or a direct claim against it.

• It offers fractional, round-the-clock price exposure without opening a foreign brokerage account.

• Founded: 1990

• Headquarters: Cambridge, United Kingdom

• CEO: Rene Haas

• Listed on: Nasdaq (ARM), since September 2023

• Majority owner: SoftBank Group

• Sector: Semiconductor intellectual property

• Arm licenses processor architecture designs rather than manufacturing chips.

• Its instruction set underpins the overwhelming majority of smartphone processors.

• Revenue comes from upfront licence fees plus per-unit royalties, giving it exposure to shipment volumes across the industry.

• Licensing revenue comes from upfront fees paid by chip designers for access to Arm architecture and designs.

• Royalty revenue is earned on each chip shipped that uses Arm technology.

• Smartphones are the largest end market, with data centre, automotive, PCs and IoT growing.

• Compute subsystems, which are more complete pre-integrated designs, carry higher royalty rates.

• You get price exposure to the underlying instrument.

• You do not get shareholder voting rights.

• Dividend or distribution treatment depends on the issuer's structure and is often not passed through.

• You take on issuer and custodian risk in addition to the price risk of the underlying.

Pros:

• Its architecture is used in the overwhelming majority of smartphones.

• Cloud providers have built their own Arm-based server chips, which widens its data centre presence.

• Newer architecture versions and subsystems earn higher royalties per chip.

Cons:

• SoftBank holds most of the shares, which concentrates control.

• The open RISC-V architecture is an emerging royalty-free alternative.

• The stock trades at a high valuation relative to current revenue.

• Counterparty risk: if the issuer or custodian fails, the backing may not be recoverable.

• Tracking risk: the token price can diverge from the underlying, particularly outside US market hours when the underlying does not trade.

• Liquidity risk: on-chain liquidity is thinner than the underlying market, so spreads can widen sharply.

• Regulatory risk: India does not yet have a settled framework for tokenised equities, and tax treatment remains unclear.

• Price risk specific to the underlying instrument.