The correction in Arm shares seen after the second day of trading gave reassurance to those skeptics who doubt the company’s ability to achieve quick success outside of the smartphone market. At the same time, representatives of Arm themselves are convinced that over time it will be the central processors of smartphones and laptops that will begin to perform the most important calculations related to artificial intelligence.
Similar assessments were made by Arm CFO Jason Child, as reported by Barrons. The company now generates up to 45% of total sales in the smartphone segment and controls almost 99% of the market there. The second largest source of revenue is the growing Internet of Things segment, but its unit revenues are quite modest and therefore only generate significant revenue due to the large number of components supplied to meet the needs of this market. According to an Arm representative, the cloud systems processor segment will soon compete widely with the Internet of Things market for the company itself. The automotive sector will also grow dynamically.
In its most recent fiscal year, which ended in March, the company received royalties from more than 30 billion customer shipments of processors with Arm-compatible architecture. That’s 70% more than in 2016. On average, Arm receives $0.06 for each processor sold, but the amount will increase as more complex architectures become available.
Market conditions for artificial intelligence systems will also change, according to Arm’s CFO. Currently, the main investments are aimed at building and training language models. For this we need computing accelerators from NVIDIA and other companies that want to compete with them. Over time, Child said, the computing burden will increasingly shift to devices that can make logical inferences, namely smartphones and laptops equipped with central processors that support specialized instruction sets.
By the way, Intel and AMD in the personal computer segment are already preparing to work in such conditions and are introducing corresponding instruction sets into new generations of their processors. HP Inc. and Dell are also open about their intentions to release corresponding laptop models. “The most exciting application of artificial intelligence will be making you love your PC again.” – Dell COO Jeff Clarke recently admitted. Arm’s CFO added that the company is in discussions with PC makers about developing laptops based on Arm-compatible processors that could replace offerings from Intel and AMD.