Armed to make their own prototype chips to boost business post-IPO

Photo Credit: Source: arm.com

UK-based chip designer Arm is reportedly considering making its own semiconductor chips later this year. According to a Financial Times report, Arms’ own semiconductor chips will not be production units, but rather prototypes that the company will use to demonstrate its ability to win more customers. The company is currently in the process of filing its initial public offering (IPO) in the United States, which is expected to close later this year.

Arm is certainly one of the biggest stakeholders in the global chip manufacturing industry. However, it does not manufacture its own chips, instead licensing its intellectual property such as chip designs and technologies to global chipmakers. Its customers include all major global chip manufacturers, including suppliers and manufacturers such as Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Semiconductor, as well as customer-facing chip retailers such as Intel and Qualcomm.

According to the report, this will be one of the first instances where Arm is making its own chips, rather than just providing the design and technology for the cores used in a system-on-a-chip integrated circuit. According to the report, the said chips are used in mobile phones, laptops and “other electronics”. The latter added that the company has also hired a new “Solutions Engineering” team tasked with developing the new chips in question.

The move comes amid a period of global chip industry slowdown, driven by a slowdown in consumer electronics demand and broader technology spending. A Feb. 6 Gartner report said total investment by the world’s top 10 semiconductor brands and customers fell 7.6% annually over the past year, while the consulting firm forecast a further 3. 6% forecast for chipmakers this year.

Arm is currently privately held by Japanese investment firm SoftBank and is expected to go public later this year. The public listing on the New York Stock Exchange is expected to occur, after which SoftBank is expected to remain the company’s controlling shareholder.