SoftBank rises 1.89% on reports that Arm Holdings subsidiary plans to make AI-powered chips by 2025

SoftBank Group rose 1.89 percent to 8,026 yen ahead of an earnings report due after the close of trading, AFP reported. Shares rose on reports that its chip subsidiary Arm Holdings is preparing to launch artificial intelligence-powered chips by 2025.

According to a report by Nikkei Asia, British company Arm is developing AI-based chips that it plans to launch in 2025, Reuters reported. The company is ready to set up a dedicated AI chip development division and aims to unveil its first products by 2025, it added.

Plans for prototype development and mass production

Arm Holdings plans to begin development immediately, with aspirations to have a prototype ready by spring 2025, according to the report. Mass production of these AI chips is set to begin in the fall of the same year, with manufacturing responsibilities being outsourced to contract manufacturers.

Initial development costs, estimated at hundreds of billions of yen, will be covered primarily by Arm Holdings. SoftBank Group is also expected to contribute funding, according to the report.

The Nikkei report further suggests that once the mass production infrastructure is established, there are prospects for the AI ​​chip business to be spun off and placed under the SoftBank Group umbrella. Negotiations are reportedly underway with Taiwan Semiconductor Manufacturing Corp (TSMC) and other potential manufacturing partners to secure production capacity.

Arm Holdings, SoftBank Group and TSMC did not respond to inquiries, the report said. Livemint could not independently verify the report.

SoftBank Quarterly Results

SoftBank announced on May 13 that it had posted a second consecutive quarter of profitability, Bloomberg reported. That was thanks to a surge in artificial intelligence investments that boosted the assets of companies such as Arm Holdings Plc.

The Tokyo-based conglomerate reported net income of 231.1 billion yen ($1.5 billion), a significant improvement from a net loss of 57.6 billion yen in the same quarter last year. Analysts had been forecasting net income of 176.3 billion yen for the period. However, Vision Fund reported a loss of 96.7 billion yen, missing estimates for a profit of 185.1 billion yen.

SoftBank is making progress in its recovery, especially as CEO Masayoshi Son prepares to make significant investments in the AI ​​and semiconductor sectors, according to Bloomberg. The move is part of an effort to expand Arm’s capabilities beyond mobile devices.

SoftBank has stepped up its investment in AI-related hardware in recent months, sometimes acquiring controlling stakes. The Japanese investment firm is currently in negotiations to buy British semiconductor startup Graphcore, according to Bloomberg.

Additionally, earlier this month, SoftBank led a $1.05 billion funding round for British autonomous vehicle startup Wayve Technologies, partnering with Nvidia and existing investor Microsoft Corp.

Market expansion and performance

Arm Holdings, known for licensing its chip designs and generating revenue from royalties, is diversifying its portfolio by entering the data center market. A surge in demand for AI computing has been a key driver of that expansion, according to the report.

Expectations about Arm’s potential in AI computing have driven up the stock price significantly since its initial public offering last September. The company now has a market value of more than $100 billion.

SoftBank Group was expected to report a decline in financial results when it releases its earnings report on Monday, with investors eagerly awaiting insights into the company’s new growth investments.

(Based on information from Reuters, AFP and Bloomberg)