Arm to Build Its Own Chips!
On July 30, Arm Holdings CEO Rene Haas announced a strategic pivot: the company is now actively investing in the development of its own chips—marking a major departure from its long-standing model of licensing chip architecture designs to others.
This move comes amid growing market expectations that Arm will play a key role in powering next-generation AI workloads. While its stock has surged in recent months, Arm's latest quarterly outlook disappointed investors, leading to an 8% drop in after-hours trading.
Arm's increased focus on building its own chips reflects a deeper transformation. Traditionally known for licensing its CPU architectures to tech giants like Nvidia and Amazon—who in turn build their own custom chips—Arm is now stepping further into the product space. According to Haas, these new chips are essentially physical embodiments of Arm's existing Compute Subsystems (CSS), which integrate key computing functions for various applications.
“We are intentionally stepping beyond design,” Haas said in an interview. “We're building actual products—chips and potentially even full-stack solutions.”
To support this effort, Arm has reportedly been recruiting talent with chip production expertise, including professionals from its own customer base. This signals not only a push to develop capabilities in-house but also a potential source of competition with companies that previously relied on Arm's IP while designing their own silicon.
Haas did not disclose when the investment might turn profitable or offer details on specific products in the pipeline. However, he emphasized Arm's ambition: “We're focused on delivering physical chips, full boards, even entire systems.”
The company's expansion into finished chips and platforms may set it on a competitive path against existing clients in markets such as data centers and edge computing. Earlier reports indicated Arm might launch its first in-house data center CPU as early as this summer, with TSMC or other foundries handling production and Meta among the early adopters.
Despite the bold strategic shift, Arm faces near-term challenges. The company's Q2 guidance was weaker than expected, partly due to global trade tensions affecting smartphone demand—a core market for Arm's technology.
Arm forecasts adjusted earnings per share for the second fiscal quarter in the range of $0.29 to $0.37, with the midpoint below the analyst consensus of $0.36. Revenue is expected to fall between $1.01 billion and $1.11 billion, aligning with expectations.
For the first fiscal quarter, Arm reported revenue of $1.05 billion—slightly below the $1.06 billion forecast. Adjusted earnings per share were $0.35, meeting analyst expectations.
