Arm (ARM, Financial) expects to expand its share of the global data center central processing unit market to 50% by the end of 2025, up from 15% last year, according to a Reuters report citing company leadership.
The increase is being driven in part by rising demand for artificial intelligence capabilities. Shares of the chip architecture firm were down about 4% in premarket trading Monday. Mohamed Awad, head of Arm's infrastructure business, told Reuters that Arm's energy-efficient technology gives it an edge over products from Intel (INTC, Financial) and Advanced Micro Devices (AMD, Financial).
He also said that processors for data centers typically bring in higher royalties than chips designed for simpler electronics. Arm licenses chip designs and intellectual property to clients like Apple (AAPL) and Nvidia (NVDA, Financial), who use them in devices including smartphones, laptops, and servers.
According to the report, Amazon (AMZN, Financial) said in December that more than half of its chip capacity additions in the past two years used Arm-based CPUs. Microsoft (MSFT, Financial) and Google (GOOG, Financial) have also entered the Arm-based server chip space more recently.
