The Exchanges

Q Uh, how has that landed with the rest of your customer base?

A So one of the things that we were very careful about was getting, making sure the ecosystem was on board with this, because we do CPU IP, which is really only as good as the ecosystem. The ecosystem of chip people and the ecosystem of software folks and people who build around that. So we talked to just about everybody who were customers and said, you know, how do you feel about this as direction we're going? And surprisingly, we got a lot less pushback than I, than I thought. And the reason for that was the more software that's available in the wild, whether it's proprietary and or open source, benefits the broader ecosystem and the customers themselves. So whether it was Nvidia, Amazon, Microsoft, Google, All people who build ARM-based server chips, they were all on board, and I think the ultimate proof point was when we announced the product last March, we had Jensen, we had Ronnie Boker, we had Amin, we had James Hamilton, you know, all the folks from those customers I mentioned, all saying, congratulations, it's a great thing. So, uh, it's been okay.

AI assessment note: “surprisingly, we got a lot less pushback than I, than I thought.”

Q Why'd you make the move now? So for, you know, Arm, I believe existed for a few decades now. The focus was always on IP, which is effectively like designing the way that different chip components are put together. And then you license that out to other people to actually manufacture and incorporate into their designs. Why did you decide to start making some of your own CPUs?

A Yeah, it was, it was an evolution from the early days of where we just supplied simply the IP Components, the pieces, the, the CPU IP, the GPU IP, the system IP, et cetera, et cetera. Few years ago, what we were starting to see was that product cycle times aren't slowing down, uh, chip manufacturing times are extending, uh, the ability to get solutions out faster was becoming more and more important. So we moved from these individual components into what we called compute subsystems. I used, when we went, did the roadshow a few years ago, I used the, the Lego analogy where essentially We're providing the blueprint on here's how you stitch it all together. Demand for that was, was insane. Uh, and what we were finding was we were, and we initially people thought, well, people aren't going to want these subsystems because that's what a chip designer does. Why are you providing that piece? But it saved time to market and it saved a whole lot of things in terms of cost, speed, et cetera, et cetera. The physical product was sort of the next, the next leap, if you will. And There are certain sets of customers that will license IP to, and they've got all the capability in the world to, uh, to build chips based on ARM. There's a lot of companies who want to have product based on ARM. Not all of our customers build products that serve those markets. So Meta was that first example. They w…

AI assessment note: “Meta was that first example. They wanted a general purpose agentic CPU.”

Q Mm-hmm. How does, um, how has, uh, being part of the SoftBank group or working with all these different companies or even SP Energy and the, and, um, the broader ecosystem changed your point of view on what you can do with Arm?

A Well, one thing it does, it gives us a huge, uh, bird's eye view relative to, uh, where the broader industry is going, whether it's around infrastructure, whether it's around capital, whether it's around energy, but also you can imagine it could provide a home. For, for our products, right? So it, it doesn't need to be the home, but it certainly can be a home, uh, which is also a big, you know, a big, a big help. Uh, when we think about the verticals that soft banks involved with, Robotics, energy, data center infrastructure, and then you look at the products that Arm has. The only one we've announced so far is the Arm AGI CPU. You can start to connect the dots and say, gosh, there could be some very interesting opportunities that, uh, that could be an opportunity for Arm, which necessarily doesn't mean that we're getting into the broad merchant ship business. We could be just doing products simply back for, uh, for SoftBank.

AI assessment note: “We could be just doing products simply back for, uh, for SoftBank.”

Q to more compute for the AI industry. So, you know, two years ago or so, I think it was like packaging and packaging related items. And then eventually now people want to talk about how it's memory and things like that, that are in some sense limiting to certain systems being built at sufficient scale. Do you have a view of what is the next sort of bottleneck that's coming?

A I think building out the data centers is, is going to be a bottleneck. And when I say building out, Um, if you look at all the projects that are being done today, um, not a lot of them are ahead of schedule, uh, and needing less labor than they thought. And then when you, when you layer on top of that, a lot of buzz that's coming from different parts of the, of the, of the country in the United States here relative to slowing down data center development or putting restrictions around it. I think that, uh, infrastructure build out Uh, could be a headwind just relative to, to everything going on, which may be, you know, end quote, okay, because if it wasn't, if, if infrastructure build out was not a headwind, uh, I think capacity for wafers, capacity for memory, that probably would be a, would be a headwind. So I think you're going to see a number of different governors, if you will, not governors of states, but different things that are going to throttle the growth of this, uh, which Just expounding for a second. I'd been on a bunch of panels and I get a lot, a lot of questions about AI bubble and when's it going to stop? And there's setting aside the valuation bubbles, which is a stock market index component, the, the bubble in terms of, are we over, um, oversupply to demand? Not even close. And I think again, that's because, uh, the demand is insatiable. It's given the way th…

AI assessment note: “I think building out the data centers is, is going to be a bottleneck.”

Q What are you most excited about in the coming year or two for ARM?

A Being in the center of all that. Yeah. Honestly, I think we are, we are, I feel fortunate every day that we are in the heart of all of this and, and, um, the fact that we can be a participant in that ecosystem, we can help drive the innovation, we can be involved with leadership companies, develop leadership products. Uh, we're right in the middle of it all, because A, All the AI needs some level of compute. That's what ARM does. And that compute needs to be power efficient. That's what we're really, really good at. So those roads all lead through us. So what I, and I, you know, in this industry, my, my entire career had a lot of times thinking about, gosh, what's the next product we're going to need? Do people really need another tablet and need to be 8.9 inches or 9.2 inches. And now it's, I, I, there's no, the abundance of opportunity innovation is so great with AI. So Yeah, I'm just, I'm super excited and feel blessed to be leading a company that's in the center of it all.

AI assessment note: “Being in the center of all that. Yeah. Honestly, I think we are”

Q camps. One of the camps is that they're going to be humanoid or roughly sort of the human footprint because so much of the physical world is already designed that way and the tooling is designed that way. And so you can just slot robots Right. And others view it as there's going to be much more sort of specialized task specific form factors. Do you have a hypothesis on?

A I think it's both. Yeah, I think it's both. There's a lot, there's, there are a lot of jobs and work tasks that are optimized around a person being six feet tall and, and having arms of a certain length, et cetera, et cetera. Uh, but I think it'll be both, you know, and, and I think the fact that they're going to have be smart and can learn and to answer your earlier question, arm is going to be everywhere. Uh, we are, we have a, Tremendous amount of technology from a real time sensing standpoint around microprocessors. They'll be out at the fingers. They can do perception and sensing. That's all going to be ARM based. Uh, today, whether it's NVIDIA or some of the work that Qualcomm does, most of the brains, the brains that you see in the humanoids, those are all, all running on ARM, uh, today. Uh, so I think for us going, going forward, Robo, the robotic industry will be powered by arm.

AI assessment note: “I think it's both. There are a lot of jobs and work tasks that are optimized”