Arm Dives into AI Chip Realm, SoftBank Strategic Shift Bears Fruit

Arm, a SoftBank subsidiary, diversifies into AI chip development amid rising profits. Initial chip slated for 2025 release. SoftBank aims for spinoff post-mass production, negotiating chip manufacturing partnerships. Arm pivot follows SoftBank AI-focused strategy, reflecting industry trends.

In a strategic move reflecting the burgeoning demand for artificial intelligence (AI) solutions, Arm, a subsidiary of SoftBank, announces its foray into AI chip development. The decision comes on the heels of SoftBank profitable pivot towards AI-centric ventures.

According to Nikkei Asia recent report, Arm unveils plans to establish an in-house division dedicated to AI chip development. The inaugural AI chip is slated for release by spring 2025, with mass production anticipated by autumn of the same year.

Shouldering the initial development costs, estimated to reach hundreds of billions of yen, Arm receives backing from SoftBank, which holds a commanding 90% stake. Post-mass production, there speculation about the potential spinoff of the AI chip business under SoftBank umbrella.

In pursuit of manufacturing capabilities, SoftBank initiates discussions with Taiwan Semiconductor Manufacturing Corp and other potential partners. This strategic collaboration aims to secure ample capacity for the mass production of AI chips.

Arm, renowned for its technological contributions to the majority of smartphones and tablets, asserts dominance with over 90% share in processor architecture for smartphones. Notably, it supplies architecture to Nvidia, a prominent player in AI chip development. By venturing into proprietary AI chip production, Arm seeks to reduce dependence on Nvidia.

SoftBank financial success in the final quarter of 2024 underscores its AI-focused strategy, with Arm positioned as a cornerstone for future growth. Yoshimitsu Goto, SoftBank chief financial officer, emphasizes the pivotal role of Arm in the group AI-centric ecosystem, aligning with long-term investment vision.

Arm strategic shift garners investor enthusiasm, evident in a 30% surge in stock value in February. This trajectory mirrors the broader industry trend, with various technology firms, including Samsung and OpenAI, investing heavily in AI chip development to reduce reliance on external suppliers like Nvidia.

Notably, Samsung secures significant funding to expand its Texas facility for semiconductor chip manufacturing, reflecting the industry commitment to self-sufficiency. Similarly, OpenAI, renowned for its groundbreaking ChatGPT, seeks substantial investments worldwide to kickstart in-house chip manufacturing operations, signaling a paradigm shift in the AI landscape.

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