Arm becomes SoftBank's spine

RENE HAAS, Arm's chief executive, spent six minutes on Bloomberg Television on Thursday describing an "explosion of demand" for the company's data center CPUs, with orders for the new Arm AGI CPU doubling to $2 billion in the five weeks since launch. He recited the customer roster — Meta Platforms, OpenAI, Cerebras Systems, SK Telecom — and reiterated confidence in reaching Arm's $15 billion revenue target for fiscal 2031, more than triple the $4.92 billion booked for the year ended in March. It was a fluent performance from the chief of a company whose stock had dropped 10% intraday a day earlier on weak smartphone royalties. It also obscured what is actually happening.

Arm's full-year results, reported on May 6th, capped a third consecutive year of above-20% revenue growth, with data center royalties more than doubling year-over-year for the second straight year. The data center segment now contributes 15% of total revenue, up from a single-digit share in 2023. Amazon Web Services with Graviton, Microsoft with Cobalt, Google with Axion, Nvidia with the Grace and Vera lines — each major hyperscaler now builds on Arm cores, generating royalties on chips Arm did not manufacture. Three weeks before the earnings, on April 21st, SoftBank Group quietly disclosed that Mr. Haas would assume an additional role: chief executive of SoftBank Group International ("SBGI"), the operating platform that oversees the conglomerate's portfolio of semiconductor and AI subsidiaries.