Arm Aims to Generate Over $2 Billion from Proprietary AI Chips in Next Two Years

• May 7, 2026

Arm Holdings, the British semiconductor and software design company known for its processor architecture widely used in smartphones, disclosed in its quarterly report a strategic shift in revenue focus. Despite an anticipated decline in its smartphone-related revenue due to memory shortages impacting the industry, Arm expects significant growth in its artificial intelligence (AI) chip segment, driven by its internally developed AI processors.

Expanding AI Chip Market Amid Smartphone Challenges

With the global chip shortage affecting memory components, the smartphone market is experiencing downward revenue trends. Arm’s latest financial update confirms this slowdown in the smartphone sector, which has historically been a primary source of income for the company. However, Arm is leveraging its expertise in processor design to capitalize on the rising demand for specialized AI hardware.

The company aims to increase its revenue substantially by supplying cutting-edge AI chips crafted through its proprietary designs. This strategic pivot aligns with the broader industry shift toward AI acceleration and on-device machine learning capabilities, where energy-efficient and high-performance AI processors are becoming essential.

Arm’s client base, consisting largely of smartphone chipset manufacturers, is expected to adopt more AI-centric solutions to address emerging computational needs. This presents a significant growth opportunity for Arm, as the market increasingly favors dedicated AI compute units over general-purpose processors.

While specific financial projections were not disclosed, Arm’s guidance indicates a target exceeding $2 billion in revenue from AI chip sales within the next two years. This forecast underscores the company’s confidence in its AI chip technology and the expanding market appetite for AI-driven semiconductor products.

As the semiconductor landscape evolves, Arm’s focus on AI processor innovation may position it as a crucial contributor to future hardware ecosystems, extending beyond its traditional smartphone dominance.

Arm projects more than $2 billion in revenue from its AI chip designs over the next two years, offsetting smartphone market declines.