According to a report from the Financial Times, Arm Holdings is set to revolutionize the chip industry by launching its own chip later this year. The company has already secured Meta Platforms as one of its initial customers, marking a significant departure from its traditional business model of merely licensing its chip blueprints to other firms. This strategic shift has caused a surge in Arm’s U.S.-listed shares, rising by approximately 5%.
This groundbreaking move places Arm in direct competition with some of its biggest clients, such as Nvidia, who typically develop their own chips based on Arm’s architecture. Despite the burgeoning demand for AI-related technologies, Arm has not fully capitalized on this growth as it primarily generates revenue from AI indirectly, through escalating licensing fees and royalties on chip sales by third-party companies.
Rene Haas, the CEO of Arm, is expected to unveil the company’s inaugural in-house chip as early as this summer, sources familiar with the matter revealed to the Financial Times. The chip, anticipated to serve as a central processing unit (CPU) for large data center servers, will be designed on a flexible base that can be customized to meet the specific needs of clients like Meta.
Manufacturing of the new chip is projected to be outsourced to a reputable firm, possibly Taiwan Semiconductor Manufacturing Company (TSMC), as highlighted in the report. SoftBank, the majority owner of Arm, along with Meta, refrained from immediate comments when approached by Reuters, whereas Arm chose to remain tight-lipped on the matter.
Masayoshi Son, the visionary founder of SoftBank, has positioned Arm at the forefront of his endeavors to expand AI infrastructure. The forthcoming launch of Arm’s proprietary chip represents a pivotal step in Son’s overarching strategy to venture into AI chip production, as per the Financial Times. Additionally, SoftBank is on the brink of finalizing a $6.5 billion acquisition of Ampere, a chip designer backed by Oracle, a move deemed crucial for Arm’s foray into chip manufacturing.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Alan Barona)
