SoftBank’s Arm to launch AI chips by 2025 amid explosive demand

SoftBank Group subsidiary Arm is planning to launch artificial intelligence chips by next year, according to a Nikkei Asia report, as the battle for AI chip dominance intensifies.

The U.K.-based chip designer, in which SoftBank has a 90% stake, will set up an AI chip unit to build a prototype by spring 2025, according to the report on Sunday.

SoftBank is in discussion with contract manufacturers including Taiwan’s TSMC to produce the AI chips, the report added. Mass production is slated to begin in the fall of 2025.

Arm designs the fundamental architecture upon which the chips are built. It then sells licenses for its designs to companies such as Qualcomm and Nvidia, charging royalty fees on each sale they make. The company claims 99% of premium smartphones are powered by Arm technology.

The company will bear the initial development costs of the AI chips, which could reach “hundreds of billions of yen,” according to the report. After a mass-production system has been set up, Arm’s AI chip business could be “spun off and placed under SoftBank.”

Arm shares have risen nearly 45% so far this year, and its market capitalization stands at over $113 billion, according to LSEG data. The company was acquired by SoftBank in 2016 for $32 billion, and was listed on the Nasdaq last year.

Founded and helmed by Japanese billionaire Masayoshi Son, SoftBank is betting big on AI and reportedly plans to invest $960 million by next year to boost its computing facilities for generative AI. In June, Son said SoftBank wants to “be [in] the leading position for the AI revolution.”

SoftBank is looking to build AI data centers, powered by homegrown chips, across the U.S., Europe, Asia and the Middle East as soon as 2026, Nikkei said.

SoftBank is set to report its earnings for the fiscal year ended March 31 on Monday.

Read the full report on Nikkei Asia.