Arm will pay an initial capital of potentially hundreds of billions of yen, and SoftBank is expected to contribute as well. The company holds approximately 90% of Arm’s shares. SoftBank Chairman Sun Zhengyi previously stated that he plans to increase investment in the field of generative AI.
With the upgrading of competition in artificial intelligence chips, more and more technology companies are starting to develop AI chips. Recently, it was reported that Arm has established an AI chip department with the goal of achieving mass production by 2025.
Boosted by the news, Arm surged more than 5% before the US stock market closed on May 13th. Since the beginning of this year, Arm’s stock price has risen by nearly 45%.
On May 13th, a reporter from First Financial News confirmed with Arm, who stated, “Arm does not comment on any rumors or speculations.”
The latest rumors of Arm entering the AI chip field come at a time when technology companies are increasing their investment in AI chips. Last week, Apple launched the M4 self-developed chip, which is the first AI chip to be used on an iPad. In addition, technology giants including Google, Amazon, Meta, and Microsoft are also increasing their investment in AI chip research and development to break away from their dependence on chip giant Nvidia.
Driven by the demand for computing chips generated by generative artificial intelligence, Arm’s stock price has been continuously rising since the beginning of this year. However, the company’s stock price has recently rebounded, with a 13% decline in the past month and a market value still exceeding $113 billion.
There are reports that Arm will pay an initial capital of potentially hundreds of billions of yen, and SoftBank is expected to contribute as well. The company holds approximately 90% of Arm’s shares. SoftBank Chairman Sun Zhengyi previously stated that he plans to increase investment in the field of generative AI.
SoftBank released its latest financial report on Monday, showing that its Vision Fund achieved its first annual profit since 2021, earning $4.6 billion in the fiscal year ending in March this year. SoftBank Group has achieved profitability for two consecutive quarters.
SoftBank’s Chief Financial Officer, Yoshimitsu Goto, stated at the previous quarter’s financial report press conference that SoftBank has shifted from an “Alibaba investment portfolio to an AI centric investment portfolio.”.
SoftBank has recently been revealed to be in talks to acquire British artificial intelligence chip startup Graphcore. Graphcore did not comment on this.
Arm has been expanding into the data center market recently. At Arm’s financial report conference last week, CEO Rene Haas said, “Arm is a platform company and we believe that the Arm ecosystem will occupy a significant market share in the next two to three years.”
Arm is a chip architecture design company that authorizes chip companies such as Qualcomm and Nvidia to build chip architectures and charges licensing fees. The company claims that 99% of high-end smartphones use Arm technology. In addition, Arm CPUs are also used in Nvidia’s latest Grace Blackwell data center chips.
At the same time, in addition to smartphones, Arm’s business has also expanded to fields such as data centers, automobiles, and AIPCs in recent years.
When discussing the opportunities brought by generative AI at the financial report meeting, Hass said, “Whether it’s in the cloud, from GPT to Llama, all AI workloads rely on and run on Arm, and this demand is constantly increasing.”
He also claimed that it took Arm 20 years to reach $1 billion in revenue; It only took 10 years to grow from 1 billion US dollars to 2 billion US dollars; It only took two years to grow from $2 billion to $3 billion. He expects Arm’s revenue to approach $4 billion this year.
In the quarter ending March this year, Arm’s revenue increased by 47% to $928 million, better than analyst expectations. However, Arm’s projected revenue for the full fiscal year is between $3.8 billion and $4.1 billion, slightly lower than market expectations, which has also raised concerns about its stock price outlook.
According to LSEG’s data, the recent expected price to earnings ratio of Arm’s stock price is close to 70 times, while in contrast, Nvidia’s expected price to earnings ratio is about 35 times.