Tuesday May 14 2024 05:38
3 min
Leading UK-based chip designer Arm Holdings is venturing into the artificial intelligence (AI) chip market with plans to launch its first AI chips in 2025, Nikkei Asia reported on Sunday.
The company, a subsidiary of Japan's SoftBank Group, intends to establish an AI chip division and unveil a prototype by next spring, as per the report. Mass production is anticipated to begin in the fall of 2025 through contract manufacturers.
SoftBank will reportedly cover the initial development costs. According to the report, the AI chip venture might later be spun off into a separate entity under SoftBank's umbrella.
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Negotiations are already underway with the Taiwan Semiconductor Manufacturing Company (TSMC), a major player in chip manufacturing, to handle the production, Nikkei disclosed.
This move comes as the AI chip market, currently dominated by California-based Nvidia, is becoming increasingly competitive with other tech giants such as Apple also looking to expand into the fast-growing area, as per a recent article by the Wall Street Journal.
Arm Holdings recently reported earnings for its fiscal fourth quarter, exceeding analyst expectations but not reaching the high forecasts for its yearly outlook. SoftBank is set to announce its earnings on Monday.
Despite a 14% decline over the past month, Arm shares have risen by 45% since the beginning of the year. Arm shares, which trade on the Nasdaq as American Depositary Receipts (ADRs), were up 3.3% in premarket hours on Monday at $112.45.
Meanwhile, SoftBank stock has surged nearly 60% on the Tokyo stock exchange year-to-date.
Arm stock forecasts on Wall Street appear to be largely optimistic.
16 analysts surveyed by TipRanks as of May 13 indicated a consensus “Moderate Buy” rating on Arm stock, with nine assigning it a “Buy”, six rating it a “Hold” and one analyst giving it a “Sell”. The average price target on ARM shares is $114.54, according to TipRanks, indicating a potential 5.24% upside from the last closing price of $108.84.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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