AMBQ vs ARM - New IPO battles for Edge AI?

JC888
07-10

The Company & its IPO.

On Thu, 3 Jul 2025 - chip designer Ambiq Micro (AMBQ) reported a +16.1% rise in 2024 net sales in its filing for a US initial public offering (IPO).

Both $Bank of America(BAC)$’s Securities arm (BofA Securities) and $UBS Group AG(UBS)$ are the lead underwriters for the offering.

This as growing demand for generative AI fuels spending on semiconductor technology.

Strong investor demand for AI-focused tech stocks is helping revive the IPO market, as investors warm up again to high-growth tech startups, which they have largely avoided for nearly 3 years.

The Numbers.

In IPO filing, the Austin, Texas-based company has disclosed:

  • A net loss of $39.7 million in 2024.

  • This was a +21.1% YoY improvement from its 2023’s loss of $50.3 million.

  • Net sales have climbed +16.1% to $76.1 million in 2024.

According to IPOX, Research associate, Lukas Muehlbauer:

  • Although AMBQ’s sales grew a lot in recent years, and have big customers like Google and Huawei, its reliance on a few large clients, makes it risky.

  • IPO proceeds will be used for general corporate purposes, including working capital, sales and marketing activities, and product development.

Next AI Wave.

Analysts expect companies tied to the AI boom to drive the next wave of technology listings, fueled by expectations of rapid growth as businesses adopt more generative AI applications.

AMBQ, listed on the NYSE exchange will join a wave of chip design firms that are central to the AI boom, as processors driving the demand for faster and more efficient computing.

Background.

Founded in 2010, AMBQ provides ultra-low-power semiconductor solutions, targeting the power consumption challenges of general-purpose and AI computing.

AMBQ is targeting "AI at the edge" niche with its ultra‑low‑power chips said to cut power use by 2x to 5x, giving it an edge in fast‑growing wearables market, said Muehlbauer.

As a result of most AI computing uses vast amounts of electricity, there is:

  • A driving demand for energy-efficient chips.

  • A shift towards lower-power designs.

My viewpoints: (mine only)

AMBQ’s IPO offers exposure to a fast-growing segment of the semiconductor industry, that focus on ultra-low-power chips that are increasingly important for edge AI devices like wearables and industrial sensors.

AMBQ has shown solid sales growth (details above) and is well positioned to benefit from the AI boom and rising demand for energy-efficient chips.

Its proprietary SPOT technology and over 200 patents provide a competitive edge by cutting chip power use dramatically, that is very attractive in a market seeking energy efficiency.

Like many newly listed companies, AMBQ is not profitable yet, though losses have narrowed from previous year’s.

Two Risks Factors.

Its risk stemmed from heavy reliance on a few large customers like Google and Huawei, that contributed to a bigger proportion of its revenue.

Execution risks remain a possibility for AMBQ as it scales up and competes with larger, more established chipmakers

Investors seeking long-term growth in (a) edge AI and (b) IoT markets, AMBQ’s IPO could be compelling, given:

  • Its technological differentiation.

  • Semiconductor sector’s strong (growth) momentum.

AMBQ - another ARM Holding ?

Above question popped during composition. So I did a bit of research and voila :

  • Ambiq Micro (AMBQ) and $ARM Holdings(ARM)$ share some similarities but have key differences in their business models and market roles. (see below table)

  • Equally interesting - ARM was an investor in AMBQs C-series funding round, together with Austin Ventures, Mercury Fund.

  • It is a small world when it comes to Semiconductors, due to its niche.

Investors looking for quick returns or lower risk need to be cautious due to ongoing losses and customer concentration. Long term investor, is it time to AMBQ ?

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