Arm Holdings Inc. is shifting its strategy by launching its own chips for the first time, targeting annual revenue of about $15 billion within five years. At a recent event, Arm announced that Meta Platforms will be the first major customer for its AGI CPU, a powerful 136-core chip manufactured by Taiwan Semiconductor Manufacturing Corporation.
Arm’s revenue from this new chip business is expected to surpass its current income from licensing technology, ultimately bringing total sales to approximately $25 billion. The company has set ambitious sales goals under CEO René Haas, aiming to capture a share of the lucrative data center market, which demands higher prices for semiconductors compared to smartphone chips.
The AGI CPU is designed to work effectively alongside accelerator chips from companies like Nvidia, offering better power efficiency than traditional chips from Intel and AMD. Although this move into chip sales poses risks to Arm’s relationships with longtime customers, several major firms, including OpenAI and Cerebras Systems, plan to adopt the AGI CPU.
Arm’s chips are expected to be available from various vendors later this year, with potential expansion into the Chinese market due to fewer export restrictions. Meanwhile, Arm’s profitability remains high, boasting a 98% gross profit margin in recent quarters, which contrasts sharply with competitors like Nvidia.
SoftBank Group, which owns a majority share in Arm, may benefit from this pivot to chip sales, aligning with its broader investments in AI technologies and data centers.
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