In a significant move, SoftBank-owned research and development firm Arm has announced plans to develop its own artificial intelligence (AI) chips, marking a strategic shift towards in-house production and reduced reliance on third-party suppliers like Nvidia. This development comes on the heels of SoftBank's reported profits in the final quarter of its financial year for 2024, attributed in part to its focus on AI technology.

According to a report by Nikkei Asia on May 13, Arm is establishing a dedicated division for developing AI chips, with its first protocol slated for release by spring 2025 and mass production anticipated by autumn of the same year. The initial costs of development, estimated to be in the hundreds of billions of yen, will be borne by Arm, with contributions from SoftBank, which owns a 90% stake in the company.

SoftBank is reportedly in negotiations with Taiwan Semiconductor Manufacturing Corp and other industry players to secure capacity for mass-producing the AI chips. This move is seen as a strategic effort to reduce Arm's dependence on Nvidia, a leading AI chip developer, and to capitalize on the growing demand for AI technology.

Arm, a leading provider of processor architecture, is responsible for the technology used in the main chips of "almost all smartphones and tablets," with a market share of over 90% in smartphone processor architecture. The company also supplies architecture to Nvidia, a key player in the AI chip market.

By developing its own AI chips, Arm aims to create a new ecosystem and reduce its reliance on third-party suppliers. This move is part of SoftBank's broader strategy to shift its focus towards AI technology, which is seen as a key driver of growth and innovation in the technology sector.

SoftBank's chief financial officer, Yoshimitsu Goto, emphasized the importance of AI in the company's outlook for the upcoming year, stating that "Arm is at the core of SoftBank Group's AI shift, which will create a new ecosystem, along with the various assets we've held for a long time that are using AI, centered on the Vision Fund."

Arm's stock surged by 30% in February due to its forecasted ambitions in AI, reflecting the growing interest and investment in AI technology across the industry. Other technology developers, such as Samsung and OpenAI, are also investing heavily in AI chip development, with Samsung securing a $6.4 billion grant to expand its Texas facility for semiconductor chip manufacturing and OpenAI seeking trillions of dollars in investments to begin manufacturing its own chips.

The development of in-house AI chips by Arm marks a significant milestone in the company's evolution and its contribution to the growth of the AI ecosystem. As the technology sector continues to evolve, the development of AI chips is likely to play a critical role in shaping the future of innovation and growth.