Revenue will be US$1bil to US$1.1bil in the fiscal first quarter, Arm said. — Bloomberg
SAN FRANCISCO: Arm Holdings Plc declined in late trading after giving a disappointing sales forecast for the current quarter, stoking concerns about a tariff-fuelled slowdown for the chip industry.
Revenue will be US$1bil to US$1.1bil in the fiscal first quarter, Arm said in a statement on Wednesday.
Wall Street had estimated a number at the highest end of that range.
Profit will be 30 to 38 US cents a share, minus certain items, also lower than analysts’ projections.
The company blamed the conservative forecast on the timing of new agreements with customers.
Arm is in the process of closing licensing deals and wants to make sure they’re signed before it adds the revenue to its outlook, according to chief executive officer Rene Haas.
Customers continue to push ahead with investment in chips, particularly for artificial intelligence (AI) computing, and that’s benefiting Arm, he said.
Arm gets paid in the form of licence fees and royalties for its technology, which governs the ways chips and software communicate. Licensing revenue was US$634mil last quarter, while royalty sales were US$607mil.
“We’ve been conservative to make sure we don’t overreach,” Haas said in an interview. “The health of the business is unbelievably strong. We’re seeing huge momentum in our data centre business.”
Arm shares fell more than 10% in extended trading following the announcement.
The stock had been up less than 1% this year through the close.
Arm’s forecast dovetails with commentary from chip industry peers, many of which have told investors there was a strong start to 2025, but that the economic environment has clouded forecasts.
The company decided not to provide investors with an annual target because of that uncertainty, executives told analysts on a call.
A dearth of forecasts from customers for 2025 means that Arm has less data on which to make its own projections, chief financial officer Jason Child said.
Arm’s products – classified as services – aren’t directly affected by tariffs, Child said.
Any hit, which hasn’t been felt so far, would come in the form of suppressing demand for devices such as smartphones.
Fourth-quarter revenue rose 34% to US$1.24bil, marking the first three-month period that exceeded a billion dollars.
That compares with a US$1.23bil prediction from analysts, according to data compiled by Bloomberg.
Excluding some items, profit was 55 US cents a share, topping the average estimate of 52 US cents.
Arm’s technology is fundamental to semiconductors that run most of the world’s smartphones.
Under Haas, the Cambridge, UK-based company has sought to extend its reach into data centres and personal computer components – helping it benefit more from AI spending.
The chip company’s outlook is closely watched because it provides a window into the future component plans of some of the world’s largest companies.
Those clients license its technology to use as the basis of in-house designed chips.
Its royalty revenue – charged based on devices sold – is a barometer for major electronics categories, particularly smartphones. — Bloomberg
