Chip designer Arm says it is looking to bring more compute subsystems, chiplets, and even end-to-end solutions to market as customers increasingly expect a more complete starting point for their custom silicon.
The UK-based tech biz introduced Compute Subsystems (CSS) several years ago as blueprints combining its processor cores with other Arm IP components, making it easier for licensees to develop and launch complete system-on-chip (SoC) products.
“Our Compute Subsystems, CSS, are helping customers move faster and the demand has exceeded our expectations. Our first generation of CSS is now in market with five customers and is delivering double the royalty of Armv9,” claimed Arm CEO Rene Haas on a conference call for investors and analysts to discuss results Q1 of Arm’s fiscal 2026.
In fact, Arm says it has now signed 16 CSS licenses with ten companies, more than double the count from a year ago, including the five already in use. Some three CSS licenses were signed this quarter, including two for the datacenter and one for PCs.
“We are continuing to explore the possibility of moving beyond our current platform into additional Compute Subsystems, chiplets, and potentially full-end solutions,” Haas stated, adding that Arm is now accelerating its R&D investment in this area.
An end-to-end solution would provide customers with a complete chip design they could take to a fab, without much development work.
When asked about this, Haas said Arm had nothing specific to announce today, however, further integration has been the direction of travel for its customers.
“One of the things that we’re seeing with newer customers such as CSPs [cloud service providers] and OEMs and even traditional customers is a better starting point as they develop their SoCs. And this is largely driven by the complexity of these chips and the time it takes to develop them,” he said.
“So when we look at what’s going on inside the market today, both in terms of the direction of travel of delivering complex chips and Arm being the only compute platform that can provide a solution from the smallest devices to the largest datacenters, milliwatts to megawatts, we’re in a very unique space to provide solutions in a way that no one else can. And, as a result, we’re looking deeply at those possibilities,” Haas added.
There has been persistent talk in the industry of Arm designing and possibly even directly selling its own server processor, a move that would put it in direct competition with some of its licensees. One of these is Qualcomm, which has accused the chip designer of trying to hobble its own Arm-based server efforts.
Haas also repeated Arm’s earlier claim that it expects to see server chips based on its Neoverse core designs reach nearly 50 percent market share of those going to the top hyperscalers this year. According to figures from market watcher IDC this was around 21 percent of global shipments in calendar Q1.
One of the reasons for this is AI, with Arm Neoverse “now powering the most important AI infrastructure in the world, including Nvidia Grace, AWS Graviton, Google Axion, and Microsoft Cobalt, among others,” Haas said.
In terms of Arm’s results for the quarter ending June 30, revenue was $1.05 billion, up 12 percent year-on-year, but down slightly on the record figure of $1.24 billion it posted last quarter and representing roughly the midpoint of the company’s expected range.
Within that figure, royalty revenue was up 25 percent year-on-year to $585 million, with growth across all its end markets – datacenter, automotive, smartphones, and IoT. However, the licensing part of the chipmaker’s revenue was down slightly to $468 million, which it claimed was due to “normal fluctuations” in the timing and size of license agreements.
Chief financial officer Jason Child said Arm continues to expect “a limited direct impact” from the Trump administration’s tariffs, but warned that “we have less visibility into the indirect impact on end demand. The continued uncertainty reduces near-term visibility on royalty revenue.”
For Q2 of Arm’s fiscal 2026, Child forecast revenue between $1.01 billion and $1.11 billion, the midpoint of which would represent year-on-year growth of about 25 percent.
Despite this, Arm stock fell in after-hours trading, according to investor site Motley Fool, as the markets were disappointed with the second quarter guidance for both revenue and adjusted earnings per share (EPS).
Child also let slip that the Chinese market accounted for about 21 percent of Arm’s revenue in Q1, up from 15 percent in the previous quarter and about 14 percent a year ago. ®