Which junior ASX AI company has rocketed almost 40% on a transformational deal?

Shares in Pathkey.AI Ltd (ASX: PKY) hit a new 12-month high on Wednesday after the company announced it would buy Singapore-based Chipforge, an AI-driven semiconductor hardware company.

Major share boost

Pathkey.AI shares traded as high as 7.1 cents before settling back to be changing hands for 5.7 cents around noon, up 39.02%.

The company said in its statement to the ASX that Chipforge was developing an Agentic AI platform, “that translates high-level design intent into verified, synthesisable hardware code, shortening chip development cycles that would otherwise take 12–24 months and multi-million-dollar expenditure”.

Pathkey.AI Chair Shannon Robinson said the Chipforge technology complemented the company’s existing offering.

Mr Robinson added:

By adding this complementary AI chip‑design technology to our technology stack, we are materially strengthening our position as a leader in AI. According to a recent article by McKinsey & Company, The global semiconductor market is forecast to reach around US$1 trillion by 2030, driven by AI, data‑centre expansion, edge computing, defence and next‑generation compute workloads. Against that backdrop, owning chip design and verification IP is highly strategic. This transaction accelerates our roadmap, deepens our technical moat, and positions us to capture a far greater share of value as semiconductor spending scales globally.

Pahtkey.AI said Chipforge was developing a design platform for semiconductor engineering, which would “materially reduce the time and cost of designing custom chips, one of the most expensive and time-consuming processes in modern technology”.

Such custom chip design was expensive, the company said, relying as it does on a small global pool of highly specialised hardware engineers.

Pathkey.AI added:

The bottleneck sits in two stages. First, translating a design concept into the precise hardware code that defines how a chip will behave. Second, verifying that the design actually works as intended before it is committed to silicon. Verification alone routinely consumes more than half of a chip project’s total budget and development timeline. Chipforge applies AI agents across the full design workflow.

Share-based deal

Under the terms of the deal, which is still subject to conditions, the owners of Chipforge will be issued 560 million new shares in Pathkey.AI as well as 150 million performance rights.

Pathkey.AI said it had $3.26 million in cash on hand at the end of March and expected to receive R&D rebates in the order of $840,000 over the next 12 months.

The company said it did not expect to carry out a capital raise in association with the new deal.

It added:

Based on its existing cash reserves and expected receipts, the Company considers that it is well funded to support the continued development of both the TrialKey and Chipforge platforms, together with its working capital requirements, over the next 12 months.

Pathkey.AI was valued at $24.9 million at the close of trade on Tuesday.

The post Which junior ASX AI company has rocketed almost 40% on a transformational deal? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.