Chip Designer Arm IPO Gets Leg Up From AI Boom


Generative artificial intelligence (AI) is experiencing a rocket-propelled growth, and there are a few firms helping determine that ship’s trajectory.

Among them is British chip design company Arm, which launched its IPO on Thursday (Sept. 14), raising $4.87 billion at a valuation of $54.5 billion.

Arm’s stock is already trading up from its $51 IPO price, jumping 18% as investors back the company.

The firm designs the circuits powering the chips that are in more than 99% of the world’s smartphones. 

Arm doesn’t make any silicon chips itself, instead focusing on providing design blueprints and licenses for high-performing, power-efficient processors used in products that run on batteries and need to use as little power as possible. The company’s circuit designs have been essential to the growth of the mobile device marketplace.

Arm also designs parts of the chips powering Apple computers, Amazon data centers, and an increasing share of the world’s automobiles. 

“We are celebrating our re-entrance into the public markets, and our next phase in building the future of computing,” said Rene Haas, CEO of Arm, in a statement.

“Together, we have built the world’s largest compute and software ecosystem based on the most pervasive CPU architecture in history. More than 250 billion Arm-based chips have shipped to date, making Arm CPUs the brains of everything,” Haas noted. “AI on Arm is literally everywhere… Arm and its ecosystem have boundless opportunities because everything today is a computer, and in the AI era, the world’s computing needs are insatiable.”

The IPO comes more than a year and a half after the U.S. Federal Trade Commission (FTC) sued to stop Nvidia, the Silicon Valley chip maker, from buying Arm outright for $40 billion.

See also: Preparing for A Generative AI World

The Power of AI

Advances in technology are positioning Arm as a central player in the tech ecosystem of tomorrow, and the strength of its public debut underscores that investors are betting on AI as a growth engine for the broader economy.

That’s because, after being first taken private by SoftBank in 2016, Arm pivoted from designing general-purpose CPUs for smartphones and consumer devices, to designing purpose-built CPUs for specific markets — meaning that the firm’s growth is no longer solely defined by the cycles of the smartphone market. 

As PYMNTS Intelligence finds, generative AI can place the knowledge of only a few experts into the same room with every single person who needs it.

Decades ago, the internet promised to bring the world into every home and office. Generative AI promises to harness the deluge of information that lives online and turn it into tangible, potentially life-changing solutions. 

Read moreLarge Language Models Take Generative AI Beyond Text 

The Impact of AI

PYMNTS research in the July report, “Understanding the Future of Generative Al,” a collaboration with AI-ID, revealed that LLMs — the neural networks behind OpenAI’s ChatGPT and Google’s LaMDA — could impact 40% of all working hours.

As AI’s impact grows, organizations need to strategically assess how they can employ generative AI in jobs to ensure it is worthwhile. 

“No matter the ways and means in which AI is being harnessed, it’s incumbent on firms to mull how they can enhance value rather than just chase a trend,” Shaunt Sarkissian, founder and CEO of AI-ID, told PYMNTS in May. 

Once firms have a strong idea of how to employ the technology efficiently, they will be able to adapt and redesign jobs around that. PYMNTS research in the July “Generative AI Tracker,” a collaboration with AI-ID, found that 70% of business leaders believe generative AI will have the greatest impact on marketing organizations, business operations and logistics.  

“This didn’t happen overnight,” Amir Wain, CEO and chairman at i2c, told PYMNTS in June. “There’s been a lot of work going on in AI, and now the product is at a stage where it can be deployed commercially across various applications.”

Already, PYMNTS Intelligence finds that advanced AI technology is shaping a consumer banking future in which digital assistants not only listen but also understand and anticipate consumers’ needs.

Still, the cost of doing AI business remains something for firms to consider before they make a leap of faith into the new technology.