Arm Unveils New AI Chip, Hoping to Add Billions in Revenue

Arm Holdings announced a new artificial intelligence ​data centre chip on Tuesday, which it said will add billions of dollars of revenue and represent ‌a significant shift in the company's strategy.

The new chip, called the AGI CPU, will address data-crunching needed for a specific type of AI that is able to act on behalf of users with minimal oversight, instead of responding to queries as part of a chatbot.

So-called agentic AI ​has jump-started demand for the central processing units (CPUs) produced by the likes of Intel and Advanced Micro Devices.

Arm shares ​jumped 6.5 per cent in the extended session after the company issued its financial projections. Arm stock closed ⁠down 1.4 per cent on Tuesday and has advanced 22 per cent this year.

For years, Arm, majority-owned by Japan's SoftBank Group, has relied only ​on intellectual property for revenue, licensing its designs to companies such as Qualcomm and Nvidia and then collecting a royalty payment ​based on the number of units sold.

Last year, Arm signalled to investors it was investing in making its own chip, a process that can cost hundreds of millions of dollars, and that the company had hired key executives to assist with the effort. The AGI CPU will be the ​first chip under that new strategy. "It's a very pivotal moment for the company," CEO Rene Haas said in an interview ​with Reuters.

Arm, is forecasting the new chip will generate roughly $15 billion in annual revenue in about five years, Haas said. Overall, Arm expects to ‌generate annual ⁠earnings per share of $9 and revenue of $25 billion, also in five years, he said. Haas said the company expects the intellectual property business to double over roughly five years.

The new chip will be overseen by Mohamed Awad, head of the company's cloud AI business, and Arm has additional designs in the works that it plans to release at 12- to 18-month intervals.

Meta Platforms ​will be the company's lead ​partner for the AGI CPU, and the two companies worked together on the design. Arm's customers for the new chip include ChatGPT maker OpenAI, Cloudflare, SAP, and SK Telecom.

Taiwan Semiconductor Manufacturing Co is fabricating the ​device on its 3-nanometre technology, and it is made from two distinct pieces of silicon that ​operate as a ⁠single chip. Arm plans to put it into volume production in the second half of this year, but has received test chips that function as expected.

"It's back, and it works, and it's doing everything we thought it would," Haas said, referring to the ⁠new chip.

In ​addition to the chip itself, Arm is working with server makers such ​as Lenovo and Quanta Computer to offer complete systems. For its current fiscal year, Wall Street expects Arm to generate a net profit of $1.75 per share on ​revenue of $4.91 billion, according to LSEG estimates.

Read more: Meta Hit with $375M Verdict in Child Safety Case; New Mexico Jury Ruling Adds to Global Scrutiny