With the widespread adoption of AI technology, the demand for application-specific integrated circuit (ASIC) chips based on the Arm architecture has increased significantly. Arm is expected to capture a significant share of this market due to its high-performance, low-power chip design. In particular, the rise of emerging AI companies such as DeepSeek has further boosted the demand for Arm chips. DeepSeek has made significant progress on V3 and R1 models that not only improve inference efficiency, but also reduce industry costs. This technological advancement not only boosts overall computing demand, but also gives Arm an additional market advantage.
In the data center segment, Arm's market share continues to expand. Industry giants such as AWS, Microsoft, Google, and Nvidia have adopted Arm-based chips such as AWS's Graviton, Microsoft's Cobalt, Google's Axion, and Nvidia's Grace. More than 50% of AWS's newly installed CPU capacity over the past two years is based on Graviton, and more than 90% of its top 1,000 EC2 customers are using the technology. This shows that Arm's influence in the data center market is growing rapidly.
Arm's financial performance and R&D investment
Arm delivered a record financial performance in the third quarter of 2025, with total revenue of $983 million, up 19% year-over-year. Royalty revenue increased 23% to $580 million, driven by the widespread adoption of Armv9 technology. In addition, licensing and other revenue increased 14% to $403 million.
Despite its strong financial performance, Arm continues to invest in R&D to remain competitive in the semiconductor industry. In the fiscal third quarter, Arm's operating costs increased 9% year-over-year to $522 million. This focus on R&D has enabled Arm to continue to introduce innovative technologies to meet the market demand for high-performance computing chips. Despite higher R&D spending, Arm's non-GAAP operating profit remained near its all-time high of $442 million.
Figure: AI innovation detonated the demand for chips, Arm took advantage of the momentum to take off, and DeepSeek became the driving force behind it (Source: AFP)
Arm's important project layout in the field of AI
Arm's strategic layout in the field of AI includes two important projects. The first is the Stargate project, an AI infrastructure project with SoftBank, OpenAI, Oracle, Microsoft, and NVIDIA. The initial investment in the project is USD 10 billion, and the future investment is planned to be USD 50 billion. Arm's CPUs will be used on the platform alongside NVIDIA's Blackwell CPUs and Grace, which will further strengthen Arm's position in the AI space.
This is followed by the Crystal Intelligence project, which focuses on the development of AI agents for knowledge work. This project not only demonstrates Arm's ambitions in the field of enterprise AI, but also demonstrates its broad layout in the application of AI technology. Rene Haas, CEO of Arm, believes that the development of AI training and inference will drive the demand for computing power across the AI cloud, and Arm's solutions can meet the computing needs from the cloud to the edge.
DeepSeek's positive impact on Arm
DeepSeek's technological breakthrough in the field of AI has had a positive impact on Arm. DeepSeek's V3 and R1 models not only improve inference efficiency, but also reduce industry costs. This technological advancement not only boosts overall computing demand, but also gives Arm an additional market advantage. Due to the wide range of AI workload application scenarios, from smartphones to automobiles, and other devices with limited power consumption and computing resources, Arm's advantages in computing efficiency are suitable for these scenarios.
Although Nvidia's Grace Blackwell chip performs well, it is too large for small devices, and Arm's product has more advantages. Arm will further benefit Arm as technology companies ramp up their investments in AI and computing demand continues to grow.
Conclusion
At a time when AI technology is rapidly evolving, Arm is at the forefront of this revolution with its advanced architecture and extensive technology licensing. Through continuous R&D investment and strategic layout, Arm has not only made significant progress in the data center market, but also demonstrated strong competitiveness in the AI field. With the rise of emerging AI companies such as DeepSeek, Arm is expected to occupy a significant share of the future AI market, driving the global energy transition and sustainable development.
