In a Slow Year for IPOs, this Chip Designer Could Break Out


2023 has been a slow year for IPOs, due largely to tightening monetary policies and a slowdown of global economic growth according to a report issued by Ernst & Young. While the IPO landscape is quiet at the moment, it is believed that IPO activity will pick up once inflation starts cooling and interest rates start to reverse course.

The chip and semiconductor sector has been red hot lately with NVidea (NVDA) leading the charge as companies scramble to adopt AI technologies. The Biden Administration CHIPs Act is also providing massive investments in U.S. based chip manufacturing to help lessen U.S. dependence on China and Taiwan for these valuable components.

One company getting positioned to IPO is Arm Holdings.

Arm Holdings, commonly known as Arm, is a British semiconductor and software design company that specializes in designing microprocessors, system-on-chip (SoC) architectures, and related technology. Arm is well-known for its energy-efficient and scalable processor designs, which are widely used in various electronic devices, including smartphones, tablets, embedded systems, and IoT (Internet of Things) devices. Here are some key points about Arm:

  1. History: Arm was founded in 1990 as Advanced RISC Machines Ltd., and its original mission was to develop RISC (Reduced Instruction Set Computing) microprocessor architecture. Over the years, Arm evolved into a company that licenses its processor designs and intellectual property to other semiconductor manufacturers.
  2. Business Model: Arm operates on a licensing business model. Instead of manufacturing its own chips, it licenses its processor architectures, instruction sets, and other intellectual property to other companies. These companies, known as Arm licensees, then incorporate Arm’s technology into their own semiconductor products.
  3. Processor Architectures: Arm has developed several popular processor architectures, including ARMv7, ARMv8 (64-bit), and ARMv9. These architectures serve as the foundation for a wide range of processors used in various devices, from smartphones and laptops to servers and IoT devices.
  4. Market Presence: Arm-based processors dominate the mobile device market, with most smartphones and tablets using Arm architecture. They are also prevalent in embedded systems, IoT devices, automotive systems, and more. In addition to consumer electronics, Arm processors are increasingly being used in data centers due to their energy efficiency.
  5. Partnerships: Arm collaborates with various technology companies, semiconductor manufacturers, and software developers to create a broad ecosystem around its processor designs. This ecosystem includes software tools, development platforms, and support for developers.
  6. Innovation: Arm continues to innovate in the field of microprocessor design, with a focus on energy efficiency, performance, and security. As technology evolves, Arm has been working on addressing the demands of emerging applications, such as artificial intelligence (AI) and machine learning (ML).
  7. Global Presence: While Arm was originally founded in the United Kingdom, it has a global presence with offices and facilities around the world, serving customers and partners in various regions.

The company is launching an IPO road show in the U.S., courting T. Rowe Price for a potential $52 Billion valuation ask, according to a report from Reuters.

We will follow up on the status of this looming IPO in the weeks and months to come.

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