Not enough to collect royalties? Report: ARM personally enters the chip-making field, set to start production in 2025

According to media reports on May 12th, chip design company Arm is planning to develop its first AI chip, with the goal of launching it in 2025.

The report states that Arm, headquartered in the UK, will establish an AI chip division and aims to produce a prototype product by spring 2025. Mass production will be handled by contract manufacturers and is expected to begin in the fall of 2025.

Currently, SoftBank Group holds a 90% stake in Arm. The initial investment in the newly established chip division will be borne by SoftBank. Once the mass production system is established, Arm's AI chip business may be spun off and integrated into SoftBank. SoftBank is in negotiations with companies such as TSMC on chip manufacturing to ensure capacity.

Previously, Arm generated revenue by licensing its chip designs to other companies. Analysts such as Charlie Chan from Morgan Stanley recently released a report, optimistic about the prospects of Windows on Arm (WoA) AI PCs. Analysts believe that AI personal computers based on the Arm architecture are expected to gain a larger market share in the coming years, with related semiconductor stocks being potential beneficiaries. Currently, processors based on Arm (from Apple and Qualcomm) have begun to catch up with x86 in terms of energy efficiency (measured in performance per watt), which is crucial for the future competition of AI PCs.

Furthermore, Arm has been expanding into the data center market. In the data center market, operators are seeking to develop their own chips to support new AI models and reduce dependence on dominant suppliers like NVIDIA. There have been reports that Apple will provide some upcoming AI features through data centers equipped with self-developed processors.

Just last week, Arm released its fourth-quarter financial report. Despite the comprehensive outperformance of the financial report, with total revenue hitting record highs for multiple quarters and next quarter guidance exceeding expectations, concerns have been raised in the market about the slowdown in the AI spending frenzy in the tech industry due to the "lackluster" revenue guidance for the fiscal year 2025 ending in March.

Arm's stock price has dropped by 11% in the past month, but is still up 57% year-to-date.