(Bloomberg) — Arm Holdings Plc warned of sluggishness in the smartphone industry, crimping a vital source of the chip company\u2019s revenue, while promising that AI data center growth would more than offset the slump.<\/p>\n
Most Read from Bloomberg<\/p>\n
During a conference call to discuss fourth-quarter results, Chief Executive Officer Rene Haas said he saw unit growth for phones \u201cflip to negative\u201d last quarter. But the slowdown is concentrated in the lower end of the market, he said, limiting the impact on Arm.<\/p>\n
Arm shares swung widely in late trading after the earnings report was released Wednesday, with the stock sliding about 6% by 5:45 p.m. in New York. The shares had more than doubled this year through the close, setting high expectations for the results.<\/p>\n
Arm still relies heavily on the smartphone industry for revenue, and that market has been shaky lately. Device makers are struggling with a lack of memory chips, hurting overall production. A push into data centers and other markets is meant to help insulate Arm from a volatile smartphone sector.<\/p>\n
Royalties \u2014 a closely watched measure for Arm \u2014 generated $671 million in revenue last quarter. That fell short of an average estimate of $693 million.<\/p>\n
Total revenue will be about $1.26 billion in the fiscal first quarter, which runs through June, the company said. Analysts predicted $1.25 billion on average, according to data compiled by Bloomberg. Profit will be 40 cents a share, excluding certain items, compared with a 36-cent estimate.<\/p>\n
The outlook reflects Arm\u2019s efforts to generate more revenue from data centers. Cloud computing providers are stepping up investments in infrastructure to handle a flood of AI services \u2014 and that means relying more on Arm\u2019s underlying technology for chips.<\/p>\n
\u201cWe\u2019re seeing the acceleration of Arm being a significant player in the data center,\u201d Haas said in an interview.<\/p>\n
Haas has sought to further capitalize on explosive demand for AI computing by beginning to sell homegrown chips. Until now, the company has focused on offering semiconductor designs \u2014 with Arm\u2019s revenue coming from licensing and royalties.<\/p>\n
A move to offer a central processing unit, or CPU, will help Arm more directly benefit from the AI data center build-out. The UK-based company said Wednesday that this new product \u2014 called the AGI CPU \u2014 would generate more than $2 billion \u201cacross 2027 and 2028.\u201d Arm said in March that it had $1 billion of orders.<\/p>\n
In the fiscal fourth quarter, revenue increased 20% to $1.49 billion. Profit was 60 cents a share in the period, which ran through March. Those figures both beat analysts\u2019 estimates.<\/p>\n
Licensing revenue, an indicator of customer interest in future use of Arm\u2019s products, was $819 million, compared with an average estimate of $775.6 million.<\/p>\n
The company gets paid in two ways: licenses that let customers use its designs and standards, and royalties paid per unit when the resulting chips are shipped. Actually selling chips under its own brand is a major shift for the company, which has benefited from being a neutral provider of crucial layers of technology to the whole industry.<\/p>\n
The chipmaker, which held an initial public offering in 2023, remains majority-owned by Japan\u2019s SoftBank Group Corp. That company appointed Haas to a wider role within the group in April. He will lead its international operations as part of founder Masayoshi Son\u2019s push into AI chipmaking.<\/p>\n
Haas will continue to be CEO of Arm while also running San Carlos, California-based SoftBank Group International division and help the group\u2019s chip and AI companies work together. SoftBank owns almost 90% of Arm and has acquired other chipmakers \u2014 Ampere Computing LLC and Graphcore Ltd. \u2014 in recent years.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Arm Holdings Plc warned of sluggishness in the smartphone industry, crimping a vital source of the…\n","protected":false},"author":2,"featured_media":415340,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,85447,69592,363,364,902,1656,14868,111,139,69,84588,145],"class_list":["post-415339","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-ai-data-center","tag-arm-holdings-plc","tag-artificial-intelligence","tag-artificialintelligence","tag-bloomberg","tag-company","tag-data-center","tag-new-zealand","tag-newzealand","tag-nz","tag-rene-haas","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/415339","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=415339"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/415339\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/415340"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=415339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=415339"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=415339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}