UK-based Arm, one of the world’s key players in the chip market, is reportedly planning to expand into the development of AI chips.

Arm designs the building architecture for chips (mainly) in consumer electronics, which it licenses to semiconductor giants such as Qualcomm and Nvidia. The company claims that its technology is powering 99% of premium smartphones on the market.

Japanese SoftBank Group holds a 90% stake in the chip designer.The move towards AI chips is part of SoftBank’s ambition to become a force in artificial intelligence, Nikkei Asia reports.

According to the paper, Arm will set up a dedicated AI chip division to build a prototype by spring 2025, with mass production expected to begin during the fall of that year.

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Arm will bear the initial development costs, with SoftBank also contributing. The total expense could reportedly reach hundreds of billions of yen.

Once a mass-production system is in place, SoftBank could spin off the AI division and take it under the Group as a standalone company, Nikkei Asia said. The newspaper added that SoftBank is in talks with chip manufacturers such as Taiwan Semiconductor Manufacturing Corp (TSMC) to ensure production capacity.

SoftBank aims to tap the AI chip market, which is expected to top $200bn by 2030. A pivot towards AI could also safeguard against any potential prolonged slowdown in the semiconductor market for less advanced chips — with giants such as ASML and Infineon currently experiencing drops in revenue.

Arm itself saw a 47% growth in year-on-year revenue during the last quarter, but its full-year forecast failed to impress investors and saw the company’s shares drop last week.

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