Arm Launches First Self-Designed AGI CPU Chip, Single Product Estimated Revenue of $15 Billion by 2031, Meta and OpenAI to Adopt First

British semiconductor design company Arm Holdings (NASDAQ: ARM) saw its stock surge over 14% on Wednesday after CEO Rene Haas announced at a conference in San Francisco that Arm is launching its first in-house chip, the AGI CPU. The chip is estimated to generate $15 billion in revenue alone by 2031. The company’s overall annual revenue is projected to reach $25 billion, with earnings per share of $9, representing a sixfold increase from the $4 billion annual revenue in 2025.

The company’s most significant transformation in history: from licensing to in-house manufacturing

For decades, Arm’s business model has been to license its instruction set architecture to other companies and collect licensing fees from each processor using its design. With this new chip launch, Arm is effectively competing directly with its customers, including Amazon, Microsoft, Nvidia, and Google.

Citigroup analysts noted in a research report that this is “the most significant change in Arm’s history.” Although rumors of Arm entering chip manufacturing have circulated for some time, the full server chip release, support from major companies like Meta and OpenAI, and revenue expectations far exceeding market optimism still bring positive surprises.

“Arm’s forecast is far above the highest market estimates,” said Citigroup analysts, pointing out that the $15 billion revenue target will drive an incremental gross profit and operating profit of $7.5 billion and $5 billion, respectively, alleviating concerns about gross margin structure.

AGI CPU: Designed specifically for AI inference, targeting data center markets

The AGI CPU is optimized for AI inference tasks in data centers, aligning with the rising demand for CPUs driven by the emergence of Agentic AI. Mohamed Awad, head of cloud AI at Arm, stated that this is a “trillion-dollar market,” and existing partners continue to recognize the positive industry implications.

Initial customers include Meta (which is expanding its data centers significantly, with AI-related capital expenditure reaching $135 billion this year), OpenAI, Cloudflare, and SAP.

Approximately 50% gross margin, competitive pricing

Arm CFO Jason Child revealed that the AGI CPU has a gross margin of about 50%. Awad added that the pricing strategy is “competitive,” aiming to serve companies unable to develop their own chips and providing existing customers with more options.

“This expands our market, includes customers not interested in IP licensing models, offers more choices to current clients, and creates greater profit opportunities for Arm,” Child stated.

This article reports that Arm’s first in-house AGI CPU chip is projected to generate $15 billion in revenue by 2031, with Meta and OpenAI among the earliest adopters, originally published on Chain News ABMedia.