Why big tech loves to get up in Arms

If you thought the AI boom was done turning companies into tech giants, think again.

Driving the news: British chip designer Arm has garnered more investor attention as SoftBank, which owns 90% of the company, posted a quarterly profit. The firm has now put Arm at the “core” of a ~$87.5 billion shift into AI.

Catch-up: Arm designs a basic version of a chip, called an “architecture,” and licenses it to companies that customize it to their needs and make a final product. Arm designs are energy and heat efficient, which is ideal for phones — Apple has used Arm-based chips in iPhones since 2010 — but also data centres that are gobbling up too much electricity.

  • Data centres are where the growth is: When Microsoft, Google, and Amazon decided to make their own data centre chips, they turned to Arm.

Zoom out: Arm architectures are used for CPUs, which manage most general tasks in a computer system. GPUs are chips that train and run AI, but Arm has positioned its designs as a perfect pairing for in-demand GPUs from Nvidia in their expanding data centres.

Why it matters: When big tech companies design a new chip, the fact that it uses Arm architecture grabs as many headlines as the chip itself. That level of acclaim, combined with a cash infusion from SoftBank, could set it up to go from industry darling to the next tech powerhouse.

  • Roughly 80% of the 1,100 new hires Arm made over the last year were in engineering, so it may already have new products in the pipeline.

What’s next: Arm is reportedly planning to set up an AI chip division, though it’s unclear whether it will start making architectures for GPUs, or make chips that compete with Nvidia.