Arm plc(US:ARM) Sou Hu Cai Jing·2025-07-31 01:55Core Viewpoint - Arm's second-quarter financial forecast fell short of market expectations, leading to an 8.65% drop in stock price, primarily due to plans to invest profits in developing its own chips and components, which disappointed investors [2]. Group 1: Strategic Shift - Arm is transitioning from licensing designs to developing its own chips, marking a significant change in its business model [2][3]. - The CEO, Rene Haas, emphasized that the investment in chip development is a conscious decision to move beyond just design and into manufacturing [2][3]. - The company is exploring the development of Chiplets, which are smaller, function-specific versions of larger chips, to integrate hardware and software solutions [2]. Group 2: Financial Performance - Arm reported first-quarter sales of $1.05 billion, slightly below the expected $1.06 billion, with adjusted earnings per share of $0.35, in line with expectations [6]. - The forecast for second-quarter adjusted earnings per share is between $0.29 and $0.37, with the midpoint below the analyst average expectation of $0.36 [6]. - Expected revenue for the second quarter is projected between $1.01 billion and $1.11 billion, consistent with the $1.06 billion forecast [6]. Group 3: Legal and Competitive Landscape - Arm is facing a lawsuit from Qualcomm regarding technology licensing, with allegations of competing with clients in the data center processor market [4][5]. - Despite claims of exploring chip design, Arm's CEO has previously stated that the company does not manufacture chips [6]. - There are indications that Arm is developing its own chips, with the first expected to launch soon, potentially impacting its relationships with clients like Meta [6].