For more than 35 years, Arm Holdings (ARM 1.56%) has been at the forefront of chip design, creating and licensing the blueprints for a wide range of semiconductors for smartphones, personal computers, tablets, and smart TVs, as well as hyperscale computing, cloud computing, and data centers. Moreover, the company's chip designs are used in thermostats, automobiles, and even drones. In fact, Arm say it controls a "significant proportion of all chips with embedded processors."
Now that the proliferation of artificial intelligence (AI) is taking hold, the company is making what is arguably the biggest pivot in its storied history. Arm is making physical silicon for the first time, a move long rumored in the industry. At an event in San Francisco this week, Arm unveiled its first in-house chip, dubbed the Arm AGI CPU.
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The era of agentic AI
The company says the Arm AGI CPU is "the first production silicon from Arm, designed for AI infrastructure at scale." The chip is "ruthlessly optimized" for artificial general intelligence (AGI), hence the name, according to Mohamed Awad, Arm's cloud AI chief.
The processor boasts up to 64 CPUs and about 8,700 cores, which can get "two times the performance-per-watt than you can from an x86 rack," Awad said. "That means twice as much performance in the same footprint, in the same power." He went on to say the benefit of Arm's architecture is that it's "super-efficient" at a time when companies are looking to get the most bang for their AI buck.
Arm unveiled a Who's Who of technology companies as customers for its inaugural semiconductor. Meta Platforms (META 1.84%) served as the lead partner and co-developer of the Arm AGI CPU and will be its first wide-scale user, noting that it was created to work hand in hand with Meta's homegrown chips -- the Meta Training and Inference Accelerator (MTIA). The companies pledged to collaborate across multiple generations of the Arm AGI CPU roadmap.
NASDAQ: ARM
Key Data Points
Other early customers include content delivery network (CDN) provider Cloudflare, multi-cloud security specialist F5, ChatGPT parent OpenAI, enterprise software specialist SAP, and SK Telecom, South Korea's largest telecommunications operator, among others.
Arm is already one of the premier names in semiconductors, counting Apple, Nvidia, Amazon, Alphabet's Google, and Microsoft among its biggest customers. More than 350 billion Arm-based chips have shipped to date, with more than 22 million software developers in the Arm ecosystem. By branching into a new business, Arm hopes to capture a share of the $1 trillion AI CPU market.
And Arm sports a forward price/earnings-to-growth (PEG) ratio of 0.57, when any number less than 1 is the standard for an undervalued stock.
