According to the latest news from Reuters, Arm plans to launch self-developed chips. This decision was disclosed by CEO Rene Haas during the earnings call, which has drawn widespread attention from the industry.

Arm's plan to increase investment in the development of its own chips marks a change in its long-standing business model, which is to provide intellectual property rights to companies such as Nvidia and Amazon, which have already designed their own chips.

Rene Haas, the CEO of Arm, said that the finished chip is the "physical embodiment" of the product computing subsystem (CSS) that Arm is already selling. "We consciously decided to increase investment in an effort to go beyond design and create something, small chips, or even possible solutions." "

According to foreign media reports, in December 2024, during the court hearing of the lawsuit between Arm and Qualcomm regarding technology licensing issues, Qualcomm had already accused Arm of providing Arm computing subsystems for client and data center processors as well as other use cases, raising suspicion of competing with customers. Meanwhile, Qualcomm's legal team also presented a document prepared by Rene Haas for Arm's board of directors, indicating that Arm is still considering designing its own chips to directly supply to customers, which will make it a major competitor to customers including Qualcomm.

Rene Haas refuted these claims at that time, stating that although Arm was exploring various business opportunities, it did not manufacture chips and had never ventured into this industry. However, in February this year, the Financial Times of the UK reported that Arm is developing its own chips. The first self-developed chip is expected to be launched as early as this summer and will be manufactured by TSMC. Meta may become one of the first customers.

It is worth noting that SoftBank Group, the parent company of Arm, announced in March this year that it had acquired Ampere, an Arm server chip design company, for 6.5 billion US dollars. It remains to be seen whether SoftBank Group will integrate Arm's self-developed chip business with Ampere in the future.

Masayoshi Son, the founder of SoftBank Group, has placed Arm at the center of his efforts to expand AI infrastructure. The launch of Arm's own chips is a step in his plan to produce AI chips. The acquisition of Ampere might provide technical and talent support for Arm's chip manufacturing plans, further facilitating its development in the chip design market.

While deciding to develop its own chips, Arm also adopted a brand-new naming system for its products. Five major brands, including Neoverse for the infrastructure market, Niva for the PC market, Lumex for the mobile market, Zena for the automotive market, and Orbis for the IoT market, have all introduced Arm's computing subsystems. At the same time, names such as Ultra, Premium, Pro, Nano, and Pico will be used to display performance levels, which will make it easier for developers and customers to understand its roadmap. This means that Cortex and Corstone will no longer be used in future cores and computing subsystems.

This platform-first approach reflects the rapid transition to Arm computing platforms at the system level, not just core IP. It enables our partners to integrate our technology more quickly, with greater confidence and in a more systematic way, especially as they expand to meet AI demands.

It has been revealed that Arm plans to venture into the development of "physical chips, motherboards and even systems", and has initiated large-scale talent recruitment, including introducing experts from existing client companies. This move is regarded as part of the "Stargate Project" promoted by Masayoshi Son, the founder of SoftBank Group, aiming to build an AI infrastructure network by integrating Arm technology and invest approximately 40 billion pounds in collaboration with OpenAI, Oracle and others.

Data shows that currently, approximately 56% of Arm's revenue comes from its top five customers. Arm stated: "In the future, we may provide chip consulting or design for various use cases and end markets for certain existing customers and other third parties, including subsidiaries of SoftBank Group." "

Arm's entry into the chip design market, although it has advantages in terms of technology and market trends, also faces many challenges. Market analysts point out that from the perspective of market competition, the competition in the data center server chip market is fierce. There are not only traditional giants like Intel but also many emerging enterprises. As a new entrer, Arm will not find it easy to get a share in the market. Moreover, if the competitive relationship with existing major clients is not handled properly, it may lead to the loss of clients and affect its existing authorized business. From a technical perspective, although the Arm architecture is renowned for its high energy efficiency ratio, there is still a long way to go in technological research and development to design high-performance chips that meet the complex demands of data centers.

In terms of capital market performance, according to data from the London Stock Exchange, Arm predicts that its adjusted earnings per share for the second fiscal quarter will be between 29 and 37 cents, with the midpoint lower than the average analyst expectation of 36 cents per share. On July 30, Arm's US shares plunged by 8.65% after the market closed.

Since its stock listing in 2023, Arm's share price has soared by approximately 150%. Its recent price-to-earnings ratio has exceeded 80 times the expected earnings, far surpassing the price-to-earnings valuations of Nvidia and other chipmakers focused on artificial intelligence. However, due to the potential impact of global trade tensions on Arm's demand in its major smartphone market, the company predicted that its second-quarter profit would be slightly lower than expected, failing to meet the demand of investors who have driven its share price soaring in recent months.

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