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SoftBank’s Arm to reportedly launch AI chips by 2025 to capture explosive demand

ByYasmeeta Oon

May 13, 2024
SoftBank’s Arm to reportedly launch AI chips by 2025 to capture explosive demand

SoftBank’s Arm to reportedly launch AI chips by 2025 to capture explosive demand

SoftBank Group, the renowned multinational conglomerate, is making significant strides through its subsidiary, Arm, as it prepares to enter the competitive artificial intelligence (AI) chip market. According to a report from Nikkei Asia, Arm is expected to launch its own AI chips as early as next year, signaling a new era in the tech industry’s race for AI dominance.

Arm, a U.K.-based chip designer, holds a significant position in the technology sector, being instrumental in the architecture of chips that power the majority of premium smartphones worldwide. Under the majority ownership of SoftBank, which holds a 90% stake, Arm is not just resting on its laurels but is actively venturing into the burgeoning field of AI.

By spring 2025, Arm plans to establish a dedicated AI chip unit tasked with developing a prototype. This strategic move is supported by SoftBank’s deep pockets and visionary leadership, particularly from its founder, Masayoshi Son, who has long been an advocate for revolutionary technology advancements.

In pursuit of this ambitious goal, SoftBank and Arm are in discussions with several contract manufacturers, including Taiwan’s renowned TSMC, to kickstart the production of these AI chips. The target is to begin mass production by fall 2025, a timeline that underscores the rapid development phase Arm is undertaking.

The financial commitment from Arm and SoftBank is substantial, with initial development costs projected to reach hundreds of billions of yen. This investment underscores the high stakes involved in the AI industry and SoftBank’s commitment to maintaining a leading edge in technological innovation.

The long-term strategy could involve spinning off Arm’s AI chip business under the SoftBank umbrella once a mass-production system is established. This potential move would allow Arm to focus intensively on its AI ambitions while leveraging SoftBank’s broader business structure to maximize growth and market penetration.

The market has reacted positively to Arm’s strategic directions under SoftBank’s stewardship. Since its acquisition by SoftBank in 2016 for $32 billion and its subsequent listing on the Nasdaq last year, Arm’s shares have surged nearly 45% this year alone. With a current market capitalization exceeding $113 billion, according to LSEG data, Arm’s financial trajectory appears robust.

In terms of financial growth and market response, the trajectory has been quite impressive. After SoftBank’s acquisition of Arm in 2016 for $32 billion, the company’s strategic moves have been met with optimism. The subsequent decision to list Arm on the Nasdaq last year was a significant milestone. This year, Arm’s shares have experienced a remarkable upswing, with a nearly 45% increase since the beginning of the year, elevating the company’s market capitalization to over $113 billion according to LSEG data. These figures underscore the robust market confidence in Arm’s strategic direction and growth potential under SoftBank’s ownership.

Beyond chip manufacturing, SoftBank is aggressively expanding its AI footprint. Masayoshi Son announced plans to invest approximately $960 million by next year to enhance its computing facilities specifically for generative AI. This investment is part of a broader strategy to establish AI data centers across the U.S., Europe, Asia, and the Middle East by 2026, which will be powered by these homegrown chips.

  • Prototype by Spring 2025: Arm to finalize AI chip prototype, setting the stage for mass production.
  • Strategic Manufacturing Partnerships: Collaborations with manufacturers like TSMC pivotal for production scalability.
  • Financial Commitment: Development costs in the hundreds of billions of yen, indicating significant investment in AI technology.
  • Market Performance: Arm’s robust market performance, with significant share price increase post-Nasdaq listing.
  • Global Expansion Plans: SoftBank’s vision extends to global AI data centers, leveraging Arm’s AI chips.

As SoftBank prepares to disclose its earnings for the fiscal year ended March 31, industry observers and investors are keenly watching how these strategic moves into the AI domain will influence its financial health and market position. The forward-looking approach adopted by Arm and SoftBank not only reflects their commitment to innovation but also highlights the transformative potential of AI technology in shaping future technological landscapes.

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Featured Image courtesy of DALL-E by ChatGPT

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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