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Shares of Arm Holdings plc (Nasdaq: ARM) are surging this morning after the semiconductor design firm announced it will begin making its own chips for AI workloads. The move from chip designer to chipmaker represents the most significant shift in the company\u2019s business model in its 35-year history. Here\u2019s what you need to know.<\/p>\n<\/div>\n
For over three decades, the British semiconductor firm had one primary business model: it designed chips and then licensed those designs to other companies, including Apple and Qualcomm, which would then make their own semiconductors based on Arm\u2019s designs.\u00a0<\/p>\n
Under this business model, Arm essentially made the blueprints that other companies followed to make their own chips. And every time a company made a chip with Arm\u2019s blueprint, Arm earned a licensing fee. That license fee amounted to about 5% per chip made with Arm\u2019s blueprint, according<\/a> to Bloomberg, meaning that if a chip cost $100, ARM made about $5 from it.<\/p>\n But now Arm has announced that it will no longer be just a chip blueprint company. It will also begin making and selling its own chips directly to customers, and those chips will be designed to run AI workloads.<\/p>\n<\/div>\n At an event yesterday in San Francisco, Arm CEO Rene Haas announced the pivot in the company\u2019s business model, revealing the Arm AGI CPU. The chip is specifically designed for AI data center customers who need as much processing power as possible to run agentic AI systems.<\/p>\n This means that despite Arm\u2019s designs being the blueprint for many of the CPUs found in laptops and smartphones, including Apple\u2019s iPhone, the company\u2019s first self-made chip will not be destined for those gadgets. Instead, the company is focusing on making the chips that so-called hyperscalers need to power their data centers.<\/p>\n \u201cToday marks the next phase of the Arm compute platform and a defining moment for our company,\u201d Haas said, announcing<\/a> the pivot. \u201cWith the expansion into delivering production silicon with our Arm AGI CPU, we are giving partners more choices all built on Arm\u2019s foundation of high-performance, power-efficient computing, to support agentic AI infrastructure at global scale.\u201d<\/p>\n<\/div>\nThe Arm AGI CPU is built for the agentic AI era<\/h2>\n