Arm shares drop as outlook disappoints; company looks to invest to make own chips

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Arm shares drop as outlook disappoints company looks to invest.jpeg

Written by Max A. Shir me and Archia Bajwa

(Reuters) -ARM Holdings shares decreased by 8 % in trading on Wednesday, after the chips technology provider issued a quarterly expectations that disappoint investors, partly due to the investment of part of his profits in building their chips and other components.

The company expected the second quarter of the fiscal quarter a little less than estimates, as global trade tensions threaten to demand ARM in the basic smart phone market, and failed to satisfy investors who have sent shares in recent months.

The investment plan greatly in developing its own chips is an ARM’s long time out of providing intellectual property of companies ranging from NVIDIA to Amazon.com, which already designs its own chips.

René Haas, CEO of ARM, said the final chips are the “material embodiment” of the product arm that already sells the Compute Sub systems (CSS).

Has said in an interview with Reuters.

The smaller numbers are dedicated to jobs from a larger chip that designers can use as building blocks to form a full processor. Solutions to merge devices and software.

The company said that the decision to increase its investments in potential chips, cards and solutions may not lead to a product if ARM decides to stop development or stop various projects.

If the company chooses to create a full segment, it will be eaten in the company’s profit and not a guarantee of success. Advanced artificial intelligence chips cost more than $ 500 million per silicon alone and perhaps more for server and programs needed to support them.

To build the employees needed to make chips and other finished chips, ARM was recruited from its customers and the competition against them in deals.

Haas refused to provide a timetable in which the company’s investments in the new strategy are translated into profit, or to provide details about possible new products that are part of the initiative. But he said that the arm would look at tools, “material chip, plate, system, all of the above.”

For years, the ARM owned by the Softbank group has begun in an ambitious campaign to expand its revenues and increase its profits through a group of new high margin products such as CSS Tech and enhance the royalties they collect on each slide. Details of the discussions between the executives of the arm appeared about making their own chips during a trial in December.

The decision to build a special chip can bring the arm to direct competition with its customers such as NVIDIA, who depend on the intellectual property of the company.

Investors feel disappointed

ARM’s Chip Technology is running almost every smartphone in the world, and confirms the uncertainty expectations facing global manufacturers and their suppliers resulting from the tariff policies of US president Donald Trump.

UK -based arm expectations, a profit adjustment for each share between 29 cents and 37 cents for the second fiscal quarter, whose average is less than 36 cents of analysts per share, according to LSEG data.

“The results and expectations were light and less than expectations,” said King Chan, an analyst at the summit.

ARM has risen to about 150 % since its first appearance in the stock market in 2023, its shares recently traded more than 80 times than expected profits, and much higher than the PE’s PE’s reviews, advanced Micro and other chips that focus on artificial intelligence.

Smartphones remain the largest stronghold in ARM. Mooringstar analysts expect that ARM will continue as a dominant architecture provider in smartphone processors, with a 99 % stake in the market.

Global commercial tensions, however, the soup of expectations for the market.

The uncertainty fueled by the volatility of the customs tariffs and the ongoing challenges of the macroeconomic economy may require a reflection demand in the market, as global smartphone shipments increased by only 1 % in the April to June period, according to Data Data Corporation.

ARM expects the current quarter revenues between $ 1.01 billion and 1.11 billion dollars, in line with estimates of $ 1.06 billion.

The company has reported sales in the first quarter of $ 1.05 billion, which is shy of estimates of $ 1.06 billion. The average profit of 35 cents per share was in line with estimates.

“Call It” over a low -carb diet “), especially in China, but winning cloud design and AI ACERAator maintains (the next generation of ARM Tech).

(Participated in the reports of Max A. Shirni in San Francisco and Archia Bajwa in Bangaluru; edited by Alan Barona and Nia Williams)

2025-07-30 20:07:00

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