#201: The first 8 days of ARM

• Arm Holdings (icker: ARM) is a UK-based semiconductor ("chips") design company that just went public a lil’ over a week ago

• Today we’ll take a look at:

  • Why is Arm’s IPO getting all the attention?

  • Are there any risks in the near term?

IPO highlights + What’s the deal with ARM?

A whopping $54 billion valuation, at $51 per share (biggest IPO valuation since 2021). 95 million shares were offered to the public market.

• As of market close on 9/25 (Mon), shares are priced at ~$54

What's so special about ARM's technology? — it’s all about the chips

• ARM creates semiconductor chips, including designs and the programming languages necessary, and then licenses out its IP to other companies

• ARM supplied 99% of the world's smartphone chips, and clientele includes Apple, Microsoft, Nvidia, etc.

• The company is expanding into smart cars, home appliances, and wearables but the AI hype is where the money seems to be at

  • In May, Arm unveiled the Cortex-4 CPU chip and the G720 GPU unit, which use 40% less and 22% less bandwidth, respectively, compared to their predecessors

There are risks, and even ARM admits

Coming straight from ARM’s own IPO Prospectus from August:

• Like all companies these days, China is recognized as a “risk” given economic and geopolitical reasons

• But more importantly, there is RISC-V (pronounced "risk five"), a rival chip design backed by "some of ARM's own customers"

  • Simply put, RISC-V is a growing alternative to Arm's technology and is "open-source" or free-to-use (so, of course, customers would support this!)

  • RISC-V is nowhere close to how much progress ARM's made, but a coalition of tech giants could possibly conjoin for the longer term benefit

    • (currently, members of RISC-V include Google, Huawei, Intel, Qualcomm, Seagate, Tencent, etc.)

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