Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Arm plans to launch its own chip this year after securing Meta as one of its first customers, in a radical change to the SoftBank-owned group’s business model of licensing its blueprints to the likes of Apple and Nvidia.
Rene Haas, Arm chief executive, will unveil the first chip that it has made in-house as early as this summer, according to people familiar with the UK-based group’s plans.
The move from designing the basic building blocks of a chip to making its own complete processor could also upend the balance of power in the $700bn semiconductor industry, putting Arm into competition with some of its biggest customers.
SoftBank founder Masayoshi Son has put Arm at the centre of his plans to build a vast infrastructure network for artificial intelligence. The launch of Arm’s own chip is considered just one step in his larger plans to move into AI chip production, say people familiar with the plans.
Last month, Son unveiled his Stargate initiative, in which he and OpenAI plan to spend a purported $500bn building AI infrastructure, with Abu Dhabi state fund MGX and Oracle also providing funding for the US-based project. Arm is a key technology partner for Stargate, along with Microsoft and Nvidia.
Arm’s chip is expected to be a central processing unit (CPU) for servers in large data centres and is built on a base which can then be customised for clients including Meta, according to those familiar with the plans. Production will be outsourced to a manufacturer such as TSMC, these people said.
SoftBank is also closing in on the acquisition of Ampere, an Oracle-backed chip designer of Arm-based chips for servers that could be valued at close to $6.5bn. That deal is central to Arm’s own chipmaking project, people familiar with the plans said.
Cambridge-headquartered Arm has more than doubled in value to $160bn since it listed on the Nasdaq in 2023, carried higher by explosive investor interest in AI. Arm’s partnerships with Nvidia and Amazon have driven its rapid growth in the data centres that power AI assistants from OpenAI, Meta and Anthropic.
Meta is the latest Big Tech company to turn to Arm for server chips, displacing those traditionally provided by Intel and AMD.
During last month’s earnings call, Meta’s finance chief Susan Li said it would be “extending our custom silicon efforts to [AI] training workloads” to drive greater efficiency and performance by tuning its chips to its particular computing needs.
Meanwhile, an Arm-produced chip is also likely to eventually play a role in Sir Jony Ive’s secretive plans to build a new kind of AI-powered personal device, which is a collaboration between the iPhone designer’s firm LoveFrom, OpenAI’s Sam Altman and SoftBank.
Arm’s designs have been used in more than 300bn chips, including almost all of the world’s smartphones. Its power-efficient designs have made its CPUs, the general-purpose workhorse that sits at the heart of any computer, an increasingly attractive alternative to Intel’s chips in PCs and servers at a time when AI is making data centres much more energy intensive.
Arm, which started out in a converted turkey barn in Cambridgeshire 35 years ago, became ubiquitous in the mobile market by licensing its designs to Apple for its iPhone chips, as well as Android suppliers such as Qualcomm and MediaTek. Maintaining its unique position in the centre of the fiercely competitive mobile market has required a careful balancing act for Arm.
But Son has long pushed for Arm to make more money from its intellectual property. Under Haas, who became CEO in 2022, Arm’s business model began to evolve, with a focus on driving higher royalties from customers as the company designs more of the building blocks needed to make a chip.
Going a step further by building and selling its own complete chip is a bold move by Haas that risks putting it on a collision course with customers such as Qualcomm, which is already locked in a legal battle with Arm over licensing terms, and Nvidia, the world’s most valuable chipmaker.
Arm, SoftBank and Meta declined to comment.
Additional reporting by Hannah Murphy
