ARM Shares Slip: Smartphone Royalty Disappointment
Arm Considers Designing Its own Processors in Major Strategic Shift
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london, UK – July 30, 2025 – Chip technology provider Arm is exploring a notable strategic pivot, moving beyond its customary role of designing and licensing chip architectures to potentially designing its own processors. This move, confirmed by CEO Rene Haas, signals a conscious decision to invest more heavily in technology “beyond designs,” a development that could reshape the semiconductor landscape and its relationships with key customers.
A New Direction for Arm
in a recent interview with Reuters, Haas indicated that Arm is actively considering the development of its own chiplets or even complete semiconductors. This potential expansion into direct processor design represents a departure from Arm’s long-standing business model, which has relied on licensing its intellectual property to a vast array of chip manufacturers.
The company’s executives acknowledged the “execution risk” associated with this strategic shift during an earnings call. Arm’s extensive customer base includes major cloud service providers (CSPs) like Microsoft and Amazon, as well as original equipment manufacturers (OEMs) such as Apple, all of whom develop custom chips based on Arm’s architecture. Introducing Arm’s own finished processors could inadvertently turn these crucial partners into direct competitors.
“One of the things that we’re seeing with newer customers such as CSPs and OEMs and also even traditional customers, has asked for a better starting point,” Haas stated on the earnings call. he elaborated that Arm might develop entire chiplets, which can be integrated into custom chips, or it could potentially develop the entire chip itself. “We’re looking now at the viability of moving beyond the current platform to additional subsystems, chiplets or possibly full solutions,” Haas added.
Despite the forward-looking strategy, Arm’s largest revenue stream, royalties from smartphone chip usage, experienced a slowdown. Arm CFO Jason Child reported that “The growth wasn’t quite as strong in the smartphone sector as maybe we’d expected.”
Arm, primarily a licensing company, anticipates “limited direct impact on our royalty and licensing revenues” from this slowdown. Though, the company admitted to having “less visibility into the indirect impact on end demand,” particularly concerning potential impacts from tariffs that could slow the sales of products incorporating Arm technology. Child noted that “In licensing, customers have historically invested through near term slowdowns given lengthy chip development timelines.”
The broader economic climate, including discussions around tariffs, adds another layer of complexity. While former President Trump has indicated a willingness to impose blanket tariffs on exports from countries without separate trade agreements with the U.S., market sentiment on Wall Street appears less apprehensive than in recent periods.
SoftBank’s Continued Influence and AI Opportunities
SoftBank, which controls approximately 90% of Arm and took the company public in 2023, has expanded its licensing agreement with Arm. When questioned about this expanded agreement,Child highlighted the significant U.S. initiative to build AI infrastructure, referencing the “Stargate” project with OpenAI. “Stargate is looking to scale up over the next years,” Child commented. ”That’s a lot of compute and huge potential for lots of design opportunities.” This suggests that Arm’s strategic evolution may also be closely tied to the burgeoning demand for AI-specific hardware.
CNBC’s Kif Leswing contributed to this report.