Arm forecasts quarterly revenue above estimates on AI-driven chip demand
ARM•Shares choppy after the forecast
Arm shares were choppy in after-hours trading and down about 0.8%.
Royalties and licensing revenue rise on AI chip demand
Demand for Arm's chip architecture has surged as companies such as Alphabet GOOGL.O and Amazon.com AMZN.O build custom AI chips, boosting the company's licensing revenue and royalties as more complex chips are shipped to data centers.
Arm sells intellectual property that other chip companies license and pay royalties on for each unit shipped, but has recently decided to make its own central processing unit for the data center.
Higher demand from big tech company chips, along with new entrants such as Nvidia NVDA.O and its Vera processor, helped the company report higher-than-expected revenue, Arm CEO Rene Haas told Reuters. Qualcomm also launched its C1000 data center chip, which does not contribute to Arm revenue now but will in the future, he said.
