ARM is creating its own chips to grow the business

Currently, around 95% of the smartphone in the market are powered by ARM chip designs. Undoubtedly the chip designs by ARM for smartphone processors have become a standard industry-wide. It now looks like the company is expecting something else from its leadership position. Besides being the leader in smartphone chip designs, the company has decided to develop its own chips to demonstrate the potential of its products.

The report from Financial Times indicates that the project started six months ago. It is headed by an ex-executive designer of Snapdragon chips at Qualcomm. In the past, the company has worked with TSMC and Samsung to design semiconductors. The new chips will serve as a showcase for the business’s fresh ideas and could help it grow its customer base in the Windows laptop and PC industry as well.

Why ARM is creating its own chips?

SoftBank’s drive for growth over the past few years has forced ARM to make a number of adjustments to the way it conducts business. It includes raising prices and changing its business model to focus on charging royalties to device manufacturers rather than some of its chipmaker clients. In addition to this, the company is attempting to diversify its revenue streams before going public later this year. Designing its own chips is a part of this process.

Currently, ARM’s business is highly concentrated, with 20 customers accounting for 86% of its income. This poses a serious threat and losing even a few important clients might have a big influence on the company’s growth. With these efforts, it is anticipated that the company could emerge as a rival to Qualcomm and Apple in case it succeeds in creating its own chips. In response to this concern, the company stated that presently there are no plans regarding the sale or licensing of the chip designs to other companies. The company will design the new prototype chips for smartphones and laptops to enhance their performance and security. Eventually, all such strategies will help the company benefit its consumer base.