Overview

• Arm confirmed plans to design and potentially build its own modular chiplets and end-to-end solutions, marking a departure from its traditional IP licensing business model
• The company forecast fiscal Q2 adjusted earnings per share of $0.29 to $0.37, below analysts’ $0.36 estimate, and projected revenue between $1.01 billion and $1.11 billion
• Shares tumbled over 7% in premarket trading as investors fretted that increased R&D spending would weigh on near-term profitability
• Arm is ramping up R&D spending and hiring engineers from its licensees to support in-house chip development, putting it in direct competition with customers such as Nvidia
• Global trade tensions and U.S. tariffs threaten smartphone demand, strengthening Arm’s drive to diversify royalty growth into AI and data center markets