May 24, 2024

Arm, the semiconductor subsidiary of Japanese investment holding giant SoftBank Group, is looking to get in on the lucrative artificial intelligence race.

Cambridge, U.K.-based Arm is putting together an AI chip unit, with its sights set on a spring 2025 launch for a prototype and mass production by that fall, according to a report by Nikkei Asia. It’s part of a $64 billion bet by SoftBank CEO Masayoshi Son to bring the chipmaker into the exploding AI market and expand its data centers, robots, and power generation.

Arm, whose technology is found in smartphones and PCs, has already began to see “momentum and tailwinds from all things AI,” the firm’s CEO Rene Haas said in a call with analysts in February. Its revenues were boosted in the last three months of 2023 by long-term license agreements with leading technology companies that are using Arm’s most advanced CPUs to run AI products.

And it saw its second consecutive quarter of profit to kick off 2024, with a net income of 328.9 billion yen ($2.11 billion) from January through March. Haas said last week during an earnings call that customers were turning to Arm’s central processors to supplement Nvidia’s AI chips for use in their data centers.

Softbank, which has a 90% stake in Arm, is already in talks with Taiwan Semiconductor Manufacturing Corp. (TSMC) and others over manufacturing, looking to secure production capacity. Once Arm reaches mass production of AI chips, the business could be spun off and become a direct subsidiary of SoftBank, Nikkei Asia reports.

The move would bring Arm into competition with well-established AI-chip manufacturers — namely, Nvidia, which dominates the market and is the world’s largest AI chipmaker.

The global AI chip market was valued at $14.9 billion in 2022, and is projected to reach $383.7 billion by 2032, a report by Allied Market Research found. The market is already growing at a breakneck speed, with large AI data centers at companies like Microsoft and Amazon requiring more chips with more advanced capabilities.

Arm stock has risen almost 58% this year so far, bringing its market capitalization to just over $113 billion.

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