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Arm Holdings Plans Major Price Increases, Considers Developing Own Chips

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Arm Holdings, a key supplier of chip designs to tech giants such as Apple, Qualcomm, and Microsoft, is planning to increase its chip royalty rates by as much as 300%. The company, owned 90% by SoftBank Group, has also discussed the possibility of designing its own chips to directly compete with its major customers. These moves are part of Arm’s long-term strategy to increase its revenue and expand beyond licensing intellectual property.

Strategic Shifts and Pricing Plans

Arm’s pricing strategy, referred to as the “Picasso” project, aims to secure a $1 billion increase in smartphone-related revenue over the next decade. Part of this initiative includes raising the royalty rates it charges for ready-made chip designs, especially those based on its latest architecture, Armv9. However, large customers like Apple and Qualcomm may avoid some of these hikes by designing their own chips using Arm’s technology, bypassing Arm’s pre-designed components.

Documents presented during a trial in 2024 revealed that Arm had considered a dramatic 300% price increase for its royalty rates, though this proposal was never fully implemented. Despite the uncertainty, Arm executives expressed confidence in the company’s ability to push forward with these higher prices, even amid the possibility of losing some customers to in-house chip designs.

Competition with Customers

Arm’s ambitions to compete directly with its clients, particularly in chip design, were highlighted in testimony from CEO Rene Haas. In a conversation with an executive, Haas hinted that Arm could eventually create its own chips to compete against customers like Qualcomm, calling them “hosed” if the company pursued this path. This bold strategy has raised concerns among Arm’s customers, with analysts suggesting that Arm’s move could unsettle the market.

Despite this, Haas downplayed his comments, attributing them to informal brainstorming sessions about potential future strategies. While Arm has not yet entered the chip-manufacturing business, the company is exploring possibilities for evolving its business model.

Industry Reactions and Future Plans

Arm’s plans for expansion beyond its traditional licensing business model could significantly alter the competitive landscape in the tech industry. The company’s proposal to work more closely with device makers and secure deals directly with manufacturers has already begun to impact relationships, as evidenced by a meeting between Arm’s CEO and Samsung in 2022. This conversation stirred concerns about Qualcomm’s ability to supply chips to Samsung in the future, leading to changes in their supply agreements.

In response to these developments, analysts have expressed concern over how Arm’s potential shift toward chip design could affect its customer base, especially as it risks upsetting relationships with major firms in the semiconductor industry.

 

Taiwan’s Exclusion from US AI Export Curbs Seen as a Vote of Confidence

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Taiwan’s government expressed confidence on Wednesday after being excluded from the new U.S. restrictions on artificial intelligence (AI) chip and technology exports. The U.S. recently announced tighter controls on AI exports, aiming to maintain dominance in advanced computing technologies within the United States and among its allies.

Details of the New U.S. Export Curbs

The new U.S. regulations, introduced on Monday, limit the export of AI chips to most countries, while maintaining a block on exports to adversarial states such as China, Russia, Iran, and North Korea. However, Taiwan, along with other close U.S. allies, was granted “tier one” status, allowing unlimited access to U.S. AI technology.

Taiwan’s Confidence in Compliance

Taiwan’s Economy Ministry highlighted that the inclusion of the island in the “tier one” category should reassure both local and international stakeholders about the government’s control and adherence to international laws. The ministry emphasized that Taiwan had consistently invited U.S. officials and industry professionals to collaborate with local companies to ensure understanding and compliance with relevant regulations.

Taiwan’s Role in the Global Semiconductor Supply Chain

Taiwan is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a key supplier of chips for AI leaders such as Nvidia. The Taiwanese government, mindful of pressure from Beijing—who claims the island as its territory—has established stringent export controls to China and has pledged to enforce U.S. restrictions. In 2023, TSMC halted shipments to the Chinese company Sophgo after one of its chips was found in a Huawei AI processor, which violated U.S. sanctions.

U.S.-China Tensions and Taiwan’s Strategic Position

As tensions continue between the U.S. and China, particularly over AI technologies and national security concerns, Taiwan’s role in the semiconductor supply chain becomes increasingly critical. The island’s exclusion from the U.S. export restrictions reflects its strategic importance and the trust placed in it by the U.S. and other Western nations.

 

TSMC Posts Record Profit, Projects Strong Growth Amid AI Surge

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Taiwan Semiconductor Manufacturing Co. (TSMC) has reported a record quarterly profit, signaling robust demand for chips, particularly those used in artificial intelligence (AI) processing. The world’s largest contract chipmaker posted a 57% increase in net income, reaching T$374.68 billion ($11.4 billion) for the quarter ending December 31, 2024. This performance matched analyst expectations, with revenue climbing 39% year-on-year.

Looking ahead, TSMC is projecting significant revenue growth in the first quarter of 2025, with a forecast of approximately 37% growth, bringing in between $25 billion and $25.8 billion. For the full year, the company expects a revenue increase between 20% and 30%, driven by strong AI demand.

Despite a thriving business, TSMC faces challenges from U.S. technology restrictions targeting China. The Biden administration’s recent announcement of tighter controls on AI chip exports has raised concerns, although TSMC’s CEO, C.C. Wei, expressed confidence that these restrictions would be manageable. Wei noted that the company is applying for special permits for clients affected by these curbs and is optimistic about securing approval.

TSMC is also expanding its global footprint with ongoing construction of new fabrication plants (fabs) in the U.S., Japan, Germany, and Taiwan. The company expects its capital expenditure for 2025 to reach between $38 billion and $42 billion, a potential increase of 41%.

The AI boom has significantly boosted TSMC’s stock, making it Asia’s most valuable company. Its stock price surged 81% last year, outperforming the broader market, which saw a 28.5% gain. On Thursday, ahead of the earnings call, TSMC’s shares rose by 3.8%.