Arm to make its own prototype chips to boost post-IPO business

UK-based chip designer Arm is reportedly considering a move to make its own semiconductor chips later this year. According to a report by Financial Times, Arm’s own semiconductor chips will not be production units, but instead be prototypes that the company will use to showcase its abilities to attract more clients. The company is presently in process of filing its initial public offering (IPO) in the US, which is expected to be completed later this year.

Arm, to be sure, is one of the biggest stakeholders of the global chipmaking industry. However, it does not make its own chips — instead licensing its intellectual properties, such as chip designs and technologies, to global chipmakers. Its clients include all major global chipmakers, including suppliers and manufacturers such as Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Semiconductor, and customer-facing chip retailers such as Intel and Qualcomm.

According to the report, this will be one of the first instances where Arm will be making its own chips, and not just supply the design and technology for the cores used inside a system-on-a-chip integrated circuit. The said chips will be used in mobile phones, laptops and “other electronics”, according to the report. The latter further added that the company has also hired a new ‘solutions engineering’ team, which is tasked with developing the new chips in question.

The move comes amid a phase of global slowdown for the chip industry, driven by a drop in demand for consumer electronics and overall tech spending. A February 6 Gartner report said that total capital expenditures by the world’s top 10 semiconductor brands and customers dropped by 7.6% annually last year, while on November 28 last year, the consultancy firm projected a further 3.6% semiconductor revenue decline for chipmakers this year.

Arm is presently privately owned by Japan’s investment firm, SoftBank, and is set to go public later this year. The public listing is expected to take place on the New York Stock Exchange, after which SoftBank is still expected to remain a majority shareholder of the company.