SoftBank plans to put Arm technology at the heart of its new data center network to train and run AI, putting Arm and NVIDIA in direct competition
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It has been reported that SoftBank Group plans to place Arm technology, in which it owns roughly 90% of the shares, at the heart of a new data center dedicated to training and running AI systems. Arm, a fabless company, has previously licensed its intellectual property to companies, but if this plan goes ahead, it would put it in direct conflict with NVIDIA.
How Arm could be the unexpected winner of the AI investment boom
https://www.ft.com/content/80a1e79e-b662-40e9-9b41-6d1070f694a8
46% of Nvidia's Revenue Came From 4 Mystery Customers Last Quarter | The Motley Fool
With the rise of AI in recent years, Arm's revenue has skyrocketed, and its market capitalization has risen to about $157 billion (about 24 trillion yen) at the time of writing, far ahead of Intel's $95 billion (about 14.5 trillion yen).
'We've seen incredible advances across AI in the last few years, and the amount of innovation that AI will enable is going to be incredible,' Arm CEO Rene Haas said.
As AI becomes more popular, Arm has been maintaining a good balance with NVIDIA, with NVIDIA developing AI processors such as the B200 while Arm-based central processing units (CPUs) have been developed.
However, SoftBank CEO Masayoshi Son wants SoftBank to capture a much larger economic value from the processors than Arm currently captures from their designs, and to achieve this, SoftBank plans to open new data centers dedicated to training and operating AI systems. He also plans to place Arm technology at the center of the data center network, and is calling for Arm to move away from its traditional business model of only licensing intellectual property rights.
According to the Financial Times, Son's ambition is to push Arm from an IP licensing business into a company that can manufacture chips for data centers needed to train or build AI models. It was also noted that SoftBank's acquisition of British chipmaker Graphcore in July 2024 was a result of the company seeking expertise in bringing chips into production.
SoftBank acquires British AI chip maker Graphcore - GIGAZINE
NVIDIA has established itself as a front-runner in the AI market, and a former Arm executive said, 'It will be a big challenge for Arm to replicate NVIDIA's overwhelming computing power and long-established community of AI developers. It brings me to tears to think about the investments that will be required to break out of the fabless company framework and compete with NVIDIA.'
Still, Haas said, 'The future of AI workloads will be on Arm in some form, which is why we're spending a lot of time talking to SoftBank about the future.'
On the other hand, Haas acknowledged that it would take 'a lot of heavy lifting' for Arm to replicate NVIDIA's entire technology, including not only chips but also networking technology and software, and that Arm's neural processing unit (NPU) is intended for edge devices such as smartphones, not data centers, so it does not have the performance level of NVIDIA's AI processors. Still, he revealed that 'there is a lot of work underway on how to extend our NPU beyond edge devices such as smartphones.'
In addition, NVIDIA, a potential rival to Arm, announced its second quarter 2025 financial results on August 28, 2024, reporting that sales increased 122% year-on-year to $30.4 billion (approximately 4.6 trillion yen).
NVIDIA announces financial results for the second quarter of fiscal 2025, with sales up 122% year-on-year to over 4.3 trillion yen and the data center division reaching a record high - GIGAZINE
In its financial results report, NVIDIA reported that just four companies, 'Customer A,' 'Customer B,' 'Customer C,' and 'Customer D,' accounted for approximately 46% of NVIDIA's second quarter sales. Overseas media The Motley Fool predicted that Customer A was Microsoft, and speculated that one of Amazon, Alphabet, Meta, Oracle, Tesla, or OpenAI, which are all major investors in AI infrastructure, could be 'Customer B,' 'Customer C,' or 'Customer D.'
On the other hand, The Motley Fool pointed out that 'if one or two of these top customers were to cut spending, NVIDIA could suffer irreparable losses.'
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