Arm says it isn’t worried by tariffs, but no FY26 guidance • The Register
World War Fee Arm shares took a tumble after it declined to issue guidance for the year ahead in light of the current economic uncertainty, despite the chip designer claiming record revenue for the quarter just ended.
The UK-based tech biz said it has lower visibility into the market than usual as it kicks off a new financial year, owing to the predictability in global trade caused by the Trump administration’s tariff trickery and hostility to foreign-made products.
“As a result, we do not consider it prudent to issue full year guidance,” chief financial officer Jason Child said, speaking on the company’s investor call to discuss the latest financial figures.
Shares in Arm were down by as much as 9 per cent in after-hours trading on the Nasdaq.
However, Child was quick to assert his confidence that Arm would see healthy growth in the year ahead, going by what Arm says it can see in customer design pipelines and rising demand for custom silicon and AI.
“Given this view, we expect to continue to invest in R&D aggressively to support our customers and partners. This is a moment to press our advantages to ensure AI is everywhere and runs on Arm,” he said.
Based on current visibility, the Arm expects only a limited direct impact on its royalty and licensing revenues, according to Child. It is the longer-term indirect impact on end demand, the potential effect of tariffs on products using Arm technology, that is a cause for concern.
“In our royalty business, we estimate that 10 percent to 20 percent of our revenues stems from shipments into the US. In licensing, we have found in past slowdowns such as COVID that impact is minimal, as our customers invest through near-term slowdowns, given lengthy chip development timelines,” he explained.
If there was a 10 percent or 20 percent impact on demand, that would translate to “a couple percent impact on royalties probably at most,” Child claimed, adding: “But again, until we know exactly how this is going to apply, it’s hard to know exactly.”
Chief exec Rene Haas was his usual bullish self, re-iterating the opportunity he believes AI presents for Arm and repeating his earlier claim that half of new server chips deployed at hyperscale datacenters this year will be Arm-based.
His optimism is perhaps based on Arm’s record revenue figure of $1.24 billion for Q4 of its fiscal year 2025, which ended March 31.
“We delivered record royalty of $607 million this quarter, reflecting the growing value of every chip shipped with Arm inside. And licensing revenue hit an all-time high of $634 million, driven by new deals, including a multi-year AI partnership with the Malaysian government,” Haas boasted.
For the full year, total revenue was up 24 percent year-on-year to just over $4 billion, with royalties making up $2.17 billion of that, an increase of 20 percent, while licensing and other revenue made up about $1.84 billion, up 29 percent.
Haas said Arm’s royalty growth is broad-based, coming from all major markets, including datacenter, automotive, smartphones and IoT. On smartphones in particular, he claimed royalties were up 30 percent year-on-year, far outpacing the modest 2 percent growth seen in phone shipments, “proof of our rising value per device,” he stated.
But it is AI and the datacenter that Haas keeps returning to, pointing out that Arm cores now feature in Nvidia’s latest and much-sought after accelerator products.
“Now that Nvidia has transitioned away from the Hopper architecture to the Blackwell architecture, which uses Arm Grace CPUs, that actually has an accelerant to our overall growth in the datacenter to general purpose compute,” he claimed.
“As I mentioned in the opening, the 50 percent of new server chip designs and hyperscalers being Arm-based is really driven by a) Grace Blackwell acceleration and b) the leverage that it brings us in terms of general-purpose compute. It just makes more sense for a hyperscaler to standardize across Arm. So that’s what’s contributing to the growth there,” Haas added.
For the first quarter of FY’26 (i.e. the current quarter), Arm forecasts revenue in the range of $1 billion to $1.1 billion, down from the quarter just ended.
Child said he expects royalty revenue to be “kind of flattish” into Q2, blaming seasonal effects. “And then I expect to see somewhere in the 10 percent to 15 percent kind of sequential growth in each of the last two quarters in the back half of the year,” he stated, adding “Obviously, we’ll provide more specific guidance as we get later into the year.” ®
