Arm plc(US:ARM) Zheng Quan Shi Bao Wang·2025-07-31 11:52Core Insights - Arm's Q1 revenue was $1.05 billion, slightly below market expectations of $1.06 billion, with a net profit of $130 million, down from $223 million year-over-year [1] - The company plans to invest part of its profits into developing its own chips, marking a significant shift from its traditional IP licensing model to a strategy that includes physical chip production [1][2] - Arm's CEO, Rene Haas, emphasized the company's intention to move beyond design to building complete products, including chiplets and potential solutions [2] Financial Performance - Q1 revenue: $1.05 billion, slightly below expectations [1] - Net profit: $130 million, down from $223 million year-over-year [1] - Adjusted EPS: $0.35, in line with expectations [1] - Q2 revenue guidance: $1.01 billion to $1.11 billion, aligning with market expectations [1] Strategic Shift - Arm is actively recruiting talent, including professionals from its clients, indicating a potential competitive relationship in chip orders [2] - The company is transitioning from a design-only approach to a more integrated model that includes chip production [2] Market Position - Arm's architecture has shipped over 310 billion chips, with a large developer ecosystem of over 22 million [3] - The company maintains a leading position in mobile computing and is increasing its share in the server and PC markets [3] Competitive Landscape - By 2025, nearly 50% of computing power shipped to major cloud service providers is expected to be based on Arm architecture [4] - Arm faces competition from RISC-V, an open instruction set architecture that allows free use and modification, posing a challenge to Arm's traditional licensing model [4][5] - RISC-V has rapidly gained traction, achieving 10 billion chip shipments in just 10 years, compared to Arm's 21 years [4] Industry Challenges - Arm's traditional closed licensing model may hinder its adaptability in the evolving AI landscape, where open and flexible architectures like RISC-V are gaining popularity [5][6] - The industry is questioning whether Arm can break away from its established business logic to embrace a decentralized and open AI ecosystem [6]