How did Arm become an unexpected winner in the AI investment boom?

Source: Science and Technology News

About 20 years ago, Intel made the decision to change the course of computing history. In 2005, shortly after Apple installed Intel chips in Mac computers, Steve Jobs asked Paul Otellini, then CEO of Intel, if he was willing to supply iPhone processors, but was refused, causing a complete change in the future mobile computing architecture.

Intel's decision 20 years ago enabled Arm to effectively monopolize chip design, with a market size in the mobile market that is more than twice that of the PC industry. With the advent of the AI era, Arm has once again surpassed Intel with its unique energy-saving technology.

Since SoftBank supported Arm's IPO last year, Arm's stock price has almost tripled, with a current valuation of approximately $157 billion. In the fiscal year ending in March, Arm's annual revenue grew by 21% to $3.2 billion, and its market value surpassed former Silicon Valley giant Intel this summer. Although some people think that the AI foam is about to emerge, Ren e Haas, CEO of Arm, believes that the AI boom has just begun, and said that the future of short selling AI is like saying "the network will not happen" when the Internet foam was in 2000, or saying "the car will not appear" after the stock market panic in 1907.

Haas believes that AI advancements will drive incredible innovation. To build better AI models, more powerful processors are needed and the industry needs to be viewed optimistically. At present, Arm's role in the AI craze is mainly an ally of NVIDIA, installed with Arm based CPUs and NVIDIA's new Blackwell series AI processors. However, SoftBank CEO Masayoshi Son's goal is for Arm to manufacture its own AI chips and compete directly with NVIDIA.

According to insiders, after SoftBank invested $500 million in OpenAI earlier this month, Masayoshi Son hopes to put Arm technology at the core of the new data center network, dedicated to training and running AI systems. However, this not only conflicts with NVIDIA, but also means that Arm will completely break away from the traditional business model of only selling intellectual property.

Some market participants are concerned that this will shake Arm's neutral role in the chip industry. Considering Masayoshi Son's plan and the legal battle with Qualcomm, the market is concerned about whether Arm will begin to change its position in the semiconductor supply chain.

Son Masayoshi's goal is to push Arm from its IP licensing business to a company that can produce AI training or AI inference chips. According to sources, SoftBank's acquisition of Graphcore, a British artificial intelligence chip manufacturer, in July was also driven by its expertise in chip manufacturing.

According to reports, after failing negotiations with Intel earlier, SoftBank turned to TSMC to ensure production capacity for AI chips. However, it is reported that there will be no related announcement in the near future, and SoftBank has refused to respond.