In Test of AI Hype, British Chip Designer Arm Eyes IPO This Week

Arm is going public on Sept. 14. The most anticipated tech stock market listing of the year, it will set the tone for every other tech company thinking about going public and the health of the industry as a whole — and especially, the future of artificial intelligence.

The reason why is to do with Arm’s core product: The company designs semiconductor chips that other companies can then take and make for their products, and it counts Apple among its clients. That is why Arm’s initial public offering will be such a test of investor enthusiasm for AI as the tech arms race heats up, fueled by unprecedented hype over the emerging technology. 

Arm fashions next generation components for communications and servers and makes money by licensing its designs to other companies — these firms can fabricate and make additional adjustments as they want. The Cambridge-based company also takes a cut of the revenue other companies sell chips that use Arm technology.

It will also measure investor optimism over the U.S. and its allies’ geopolitical tension with China, which Arm lists as one of its biggest markets accounting for a quarter of its annual revenue. Geopolitical complications in the Asian country, which Arm serves through a local partner, could impact 25% of its total revenue.

Describing itself as “the foundation of the semiconductor industry,” the company’s share price is expected to retail between $47 to $51 on its debut at a $52 billion valuation — 70% higher than the $32 billion Softbank spent acquiring the company in 2016.

Arm’s IPO has attracted nearly a dozen strategic investors, including Apple and Nvidia, that, collectively, will invest nearly $800 million in the company. And on Sept. 12, Taiwan Semiconductor Manufacturing Co, the world’s biggest contract chipmaker, said it will invest up to $100 million in the semiconductor designer’s public offering.