Arm share price bulges after AI pumped revenue to a new record
Smartphones surge, but chip design champ isn't ready to predict its cloudy future
Brit chip designer Arm has posted its highest-ever quarterly revenue and seen its share price soar, thanks to a little tech that readers may recall having read the occasional story about of late: Artificial intelligence.
In its second quarter (and second coming) as a public entity, Arm posted $824 million revenue – its highest ever and a 14 percent year-on-year jump. Licensing revenue of $354 million was up 18 percent, while royalty revenue of $470 was up eleven points. Guidance for the quarter, Arm's fiscal Q3 or the three months to December 31, was $720 to $800 million – numbers the firm beat by plenty.
More customers are adopting v9, Haas added – sometimes mixing v9 cores with v8s on the same device.
Haas added that Arm "continues to gain market share in the growth markets of cloud servers and automotive which drive new streams of royalty growth." The CEO also wrote that the smartphone market has bounced back to growth and the overall semiconductor market outlook has improved.
AI's helping too, by creating demand for powerful and energy-efficient silicon.
"What we're seeing is a shift to more and more high performance capable technology to capture a wave to ensure that they can run these AI workloads," Haas observed. "Nobody wants to be caught behind with not enough performance when the new application comes out. So that has accelerated the v9 adoption, both from a standpoint of more devices using it and more devices using more of it."
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Haas explained that Arm's strategy of creating "Compute Subsystems" – packages that offer more of what chip designers need to produce a finished product than Arm has traditionally offered – is proving popular because "growth of AI is putting more demand on scarce design resources."
"Complex chips are becoming more difficult and taking longer to design, compounded by chip manufacturing cycles taking longer as well. This means chip designers must do more in less time to hit their product launch window."
Haas added: "One Arm Neoverse CSS customer successfully went from concept to working silicon of an advanced server chip in just 13 months, reducing their development time by 50 percent, and another reported saving 80 years of engineering effort resulting in over $20 million savings in cost."
The next sentence in the paragraph containing the quotes above is: "During the quarter, Microsoft announced their first cloud server chip, the Microsoft Cobalt 100, which is based on Arm Neoverse CSS."
The Register leaves it to readers to join the dots.
Haas and CFO Jason Child were not, however, willing to offer investors an insight into how Arm sees its future in the cloud market. The pair promised to do so in 90 days, when discussing the next batch of quarterly earnings. Interestingly, Haas described the firm's compute business as "almost all cloud in infrastructure" – suggesting Arm-powered on-prem servers aren't catching on.
Arm China, the misbehaving regional spinout, also delivered strong growth. Child revealed it accounted for 25 percent of revenue – "slightly up from the 20 percent from a quarter ago."
Guidance for Arm's fiscal Q4, the three months to the end of March, was set between $850 and $900 million.
Investors adored the numbers, sending Arm's scrip from $77.01 to $106.55 in after-hours trading before it settled to around $92.20. ®