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Behind the scenes of every chipmaker, there’s a set of instructions that dictates how their products will function. Over the last three decades, Arm has become the dominant company making this chip architecture, and it powers nearly every smartphone today. Apple bases its custom silicon for iPhones and MacBooks on Arm, and now Nvidia and AMD are reportedly making Arm-based PC chips, too.

Arm’s blockbuster IPO in September valued it above $54 billion, thanks in part to the growing list of companies choosing Arm over Intel‘s rival x86 architecture.

On Wednesday, it beat Wall Street expectations in its first post-IPO earnings report, with revenue up 28% on an annual basis during the quarter. Still, revenue guidance fell short of expectations, sending Arm shares down more than 7% in extended trading.

The UK-based company sells licenses for its chip architecture to companies that make central processing units, or CPUs. It also collects royalties on every chip shipped with its technology. Haas says that number topped 30 billion last year. Its customers are the biggest names in tech and chips, including Apple, Nvidia, Google, Microsoft, Amazon, Samsung, Intel and Taiwan Semiconductor Manufacturing Company.

“Most people think about a device. Then maybe if they’re really sophisticated, they think about the chip, but they don’t think about the company that came up with the original ideas behind how that chip operates,” said Bob O’Donnell, president and chief analyst at TECHnalysis Research. “But once you do understand what they do, it’s absolutely amazing the influence they have.”

Arm enables chips to use less power than those made with x86. Lately, it’s seen a big surge in adoption. 

Arm is the basis for Apple’s custom processors, which have replaced Intel chips in Macs. Amazon Web Services bases its custom server chips on Arm. Qualcomm’s flagship Snapdragon chips are also Arm-based, and getting ready to make a meaningful move into the PC market.

But Arm has also faced plenty of risks in recent years. About 20% of its revenue comes from China, according to the company. Smartphones, which almost all contain Arm processors, are seeing a major sales slump. And when Nvidia tried to buy Arm for $40 billion, the deal was blocked by regulators last year.

“That didn’t go the way that everyone anticipated or hoped that it would. But the sun comes up the next day, right? And you have to be able to build from that,” CEO Rene Haas told CNBC in an interview in October.

CNBC went to Arm’s headquarters in Cambridge, England, to find out how it became the year’s biggest IPO despite struggling smartphone sales and geopolitical uncertainty.

From smartphones to AI

Arm was founded in 1990 by 12 chip designers working out of a turkey barn in Cambridge. It was originally a joint venture between Apple, Acorn Computers, and VLSI, which is now part of NXP.

Arm’s big break came in 1993, when Apple launched its early handheld Newton device on the Arm610 processor. Haas said this gets at the “hallmarks” of the company. “We were born running a device off a battery that was going to be low cost,” he said. 

Arm’s big break came in 1993 when Apple released its handheld Newton device on the Arm610 processor.

Arm Holdings

That same year, Arm struck a deal with Texas Instruments, putting its processors in early Nokia mobile phones and beginning Arm’s climb to become the dominant smartphone architecture it is today. Arm went public for the first time in 1998. Chief architect Richard Grisenthwaite was there.

“We were about 100 people, and I’ve been very much involved in this tremendous transition that the company has gone through, expanding out from being targeting one particular market area into a wide range of different computing environments,” Grisenthwaite said.

Indeed, Arm grew rapidly in the 2000s, with the first touchscreen phones introduced in 2007 and the growth of connected home devices in the 2010s.

Arm now has some 6,500 employees globally. Grisenthwaite said the majority of those employees are in the UK, and about a sixth are in the U.S., where Arm has offices in Arizona, California, North Carolina and Texas. It also has locations in Norway, Sweden, France and India.

In 2016, Arm once again became a private company when Japan’s SoftBank acquired it for $32 billion. Haas was president of the IP products group at the time, spearheading diversification into emerging markets, including AI.

“PC and phone, automotive, data center and IoT. Those are the primary markets that we address. Every single one of those markets has AI embedded in some way, shape or form,” he said.

Arm has some 6,800 patents worldwide, with another 2,700 applications pending. Some of those are for Arm’s Neoverse line for high-performance and cloud computing, which has helped it break into AI since its launch in 2018.

In August, Nvidia announced its latest Grace Hopper Superchip, which couples its own GPUs with Arm’s Neoverse cores. 

“By bringing those together and tightly coupling the way that Nvidia has with the Grace Hopper, they’re able to come up with something that’s something like 2 to 4 times the performance of what you’d get on an x86 system for a similar amount of power,” Grisenthwaite explained.

Cash and competition

If you rewind just a couple years, Nvidia’s interest in Arm went far beyond technology integration. Arm owner Softbank needed cash after losing money on high-profile investments in companies like WeWork and Uber. In 2020, SoftBank struck a deal with Nvidia to sell Arm for $40 billion. Eighteen months later, the deal fell apart, blocked by regulators and some of Arm’s biggest customers, which also compete with Nvidia.

Haas said he was, “Disappointed it didn’t happen just because we spent so much time on it.”

Instead, Softbank announced plans to take Arm public again and Haas took over as CEO.

Arm CEO Rene Haas talks with CNBC’s Katie Tarasov in San Jose, California, on October 12, 2023.

Katie Brigham

Arm made its second public debut this September, climbing nearly 25% that day.

The stock has fallen significantly since then.

One risk comes from a free, open-source rival architecture called RISC-V. It’s seen a recent surge in backing from some of Arm’s big customers like Google, Samsung and Qualcomm, which may have been seeking alternatives when it looked like Nvidia was going to buy Arm.

For now, RISC-V remains a low risk competitor according to Futurum Group CEO Daniel Newman.

“RISC-V sits a few years behind where Arm is at, and I don’t think we’re going to hear a lot about it right away. I do think in low power, in IoT, in simpler designs, that RISC-V does have some traction,” Newman said.

Arm’s bigger competition comes from x86. Developed by Intel in the 70s, x86 is the dominant architecture used for PC processors, with a massive amount of software developed for it.

“The amount of software support is the thing that actually tends to determine the success or failure of that in the long run. Intel was very good early on with getting a ton of software support for x86,” O’Donnell explained. 

Most servers have also traditionally been based on x86, but O’Donnell said that could shift.

“What’s happened in the server market is that the software has been componentized. It’s broken up into containers and things like that, and that makes it easier to run on other architectures like Arm,” he said.

Amazon Web Services is a big player making Arm-based server chips. AWS launched its Graviton chips to rival x86 CPUs from AMD and Intel in 2018.

“And really from there, Arm went from this mobile, low power IoT, automotive specialty embedded to holy cow, we can build next generation servers, PCs, and of course continue on this massive run of silicon for smartphones, all based on Arm,” Newman said.

‘If Apple can do it, can others?’

Apple is the big partner helping Arm break into the laptop market.

Apple moved to its own Arm-based processors in Mac computers in 2020, breaking away from the Intel x86 processors that had powered them for 15 years.

In October, Apple announced its latest line of M3 processors and the MacBooks and iMacs running on them. Apple said Arm-based M3 gives the newest MacBook up to 22 hours of battery life

“Nobody really believed, until Apple went all in and basically cut ties with x86 instruction sets and said, ‘We are going to bet the future of the Mac on Arm.’ And that was a huge inflection for the company. It was a change of the guard. And this isn’t to say that Intel’s future is in big trouble, but it certainly started to raise some question marks as to, well, if Apple can do it, can others?” Newman said.

In September, Apple extended its deal with Arm through at least 2040. 

Qualcomm is another major customer making its latest PC processors using Arm, although that relationship is strained. Arm is suing Qualcomm over the right to make certain chips with its technology. The issues started after Qualcomm acquired CPU company Nuvia in 2021, and with it, Nuvia’s Arm license.

“Nuvia was actually supposed to be designing a server chip initially, so they had different terms with them. And so Qualcomm thought they could have the same terms. Arm felt no, different companies have different terms. And it’s boiled down to essentially that: legal discussions around what those terms ought to be,” O’Donnell explained.

The case is set to go to trial in 2024.

Arm is also growing in the automotive space. Although its chips have long been in cars, it’s now a rapid growth area with the rise of self-driving capabilities and partnerships with companies like Cruise.

Arm’s Grisenthwaite calls self-driving “one of the most computationally intensive tasks we’ve ever seen on this planet.”

“What we need to provide is a standard platform to allow the world’s software developers to really concentrate on this incredibly hard task going forward,” he said, while demonstrating the AVA developer platform, which brings multiple self-driving components together to function on a single processor.

This simplification is also making Arm the choice for non-chip companies like Apple, Amazon, Google and Microsoft designing their own custom silicon.

“They’ve got a smaller team than entire companies built on that. And so you have to make that process easier and simpler. And that, for example, is where Arm is starting to move in terms of enabling the design of multiple components that connect together,” O’Donnell said.

Arm Holdings headquarters in Cambridge, England, on October 3, 2023.

Max Thurlow

‘China is a good market for us’

Although more companies are making inroads into semiconductor design, the recent chip shortage exposed major concern over the fact that more than 90% of the world’s chips are manufactured in Asia. 

Now China and the U.S. are going back and forth imposing export controls on chip technologies. For now, Arm says it’s seen minimal impact from the export controls.

“What we do is obviously comply with all kinds of export regulations whenever they come out. Of course we comply. China is a good market for us: about 20% of our business. It’s shifted over the years. It used to be largely mobile phone based. Now it’s mostly around the data center and automotive,” Haas said.

In 2018, SoftBank broke off Arm’s China business into an independent entity, Arm China, that’s majority owned by a group of Chinese investors.

Haas explained further, “It’s essentially to allow us to not only grow our business in China, which is our essentially base core business. We set up a distributor arm, but at the same time, we also created an R&D arm that allows an independent entity to develop products specifically for the China market, some that are Arm based but some that are not Arm based.”

Arm China has also been embroiled in controversy, with SoftBank and Arm trying to oust the CEO of the China business, Allen Wu. Despite being fired, Wu refused to leave for years.

“It’s been very ugly and kind of messy and confusing,” O’Donnell said.

Now, several former Arm China employees are starting a new internal chip design company in China with backing from Shenzhen’s government. Arm’s stock slid more than 5% on the news, but O’Donnell said it’s not an immediate risk.

“A lot of Chinese companies have long standing relationships with Arm, so the expectation is they’re going to want to work there because they have that huge base of software. If somebody creates a new architecture, they have to build the software, and that takes years and years and years,” he said.

Arm also faces some risk from the major slump in smartphone sales.

“We’re not as impacted as folks might think because one of the trends we’ve seen, particularly in smartphones, is more and more Arm processors that go into those phones,” Haas said. “So for us, we’ve actually seen an increase in royalty per phone.

Labor is another challenge across the industry. The world’s chip leader, TSMC, is blaming a shortage of skilled workers for delays at its $40 billion fab under construction in Arizona.

“It’s hard for our whole industry because there’s no way that demand for semiconductors in the next 10 to 15 years will abate. It’s only going to increase. So it’s a pretty fierce talent war,” Haas said.

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Tech giant Seagate sees hard drive capacity tripling by 2030 on booming AI demand

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Tech giant Seagate sees hard drive capacity tripling by 2030 on booming AI demand

Seagate Technology’s headquarters in Scotts Valley, California.

Tony Avelar | Bloomberg | Getty Images

Data storage firm Seagate is working to develop a 100-terabyte hard drive by 2030, touting blistering demand from data centers for the 70-year-old technology in the artificial intelligence boom.

BS Teh, Seagate’s chief commercial officer, told CNBC that the company is aiming to launch such a drive — which would have about three times the capacity of the firm’s top-of-the-line hard drives — by 2030. The largest hard disk drive Seagate currently produces is the 36-terabyte Exos M model, which it launched in January.

“You may be thinking, ‘Who would need it?'” Teh said, referring to the idea of a 100-terabyte hard drive. “Well, plenty.”

“I think there’s definitely strong demand,” he added. “This is a key enabler for the industry to be able to deliver the storage capacity that the market needs, because there’s no other technology that’s able to produce this capacity of storage technology to meet the growth that the market needs.”

Seagate has been touting itself as more of an AI player in recent years amid the rise of foundational models like those being developed by OpenAI, Microsoft and Google. In the computer hardware market, the AI boom has largely benefited players like Nvidia which make the graphics processing units needed for training and running AI models.

Meta, Microsoft boost AI bulls, but CapEx cracks are showing

Climate concerns

But the boom in data centers comes with implications for the environment. Data centers require significant amounts of power to run.

According to the International Energy Agency, a single ChatGPT query uses up an average 2.9 watt-hours per request — nearly 10 times the amount required for a typical Google search — meaning if ChatGPT was used in the 9 billion internet searches done each day, almost 10 terawatt-hours of additional electricity a year would be required.

Teh explained that Seagate is working to address climate concerns surrounding AI’s energy demands by increasing storage density on its hard drives and ensuring its manufacturing is underpinned by renewable energy.

“We focus on what we can influence, and what we can influence comes down to how we have a sustainable way to manufacture the product,” Teh said. “We have a target to make sure that all of our factories are using renewable energy to manufacture the product.”

“With the product itself, we design it to have lower power per terabyte, or to have higher density of the device itself, such that when you actually integrate that product into your data center, you require less space, less power, less everything, because you’re using your fewer drives to fulfill that capacity,” he added.

It’s worth highlighting that Seagate faces competition from other technologies — not least from solid-state drives, which use flash memory chips rather than magnetic platters to store data electronically. However, Teh insists hard disk drive is “a much more sustainable device technology” than solid-state drives in terms of the embodied carbon.

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Uber CEO says changing employee benefits ‘is a risk we decided to take’

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Uber CEO says changing employee benefits 'is a risk we decided to take'

Uber CEO, Dara Khosrowshahi speaks during the “Intentional Equity in Sustainability” conversation at the Asia-Pacific Economic Cooperation (APEC) Leaders’ Week in San Francisco, California, on November 15, 2023.

Andrew Caballero-Reynolds | AFP | Getty Images

Uber CEO Dara Khosrowshahi last week told employees “it is what it is” at a heated all-hands meeting after the company announced it would increase its in-office requirements and change benefits.

The ride-sharing company informed employees on April 28 that they will be required to come into the office three days a week, up from two, starting in June, CNBC reported. Uber also changed the eligibility for its month-long paid sabbatical benefit, raising the requirement from five years at the company to eight years. The company also informed some employees who had been previously approved for remote work that they would be required to start coming in.

Khosrowshahi defended the policy changes against feisty employees who peppered him with questions and criticism at the company meeting and on Uber’s internal forum, according to audio and correspondence obtained by CNBC. 

“If you’re here for a sabbatical and this change causes you to change your mind, it is what it is,” Khosrowshahi told employees at the April 29 all-hands meeting. “I’m sorry about that. The reason we want you to be here is the impact on the company. The learning here. We recognize some of these changes are going to be unpopular with folks. This is a risk we decided to take.”

The clash inside Uber highlights the growing tension between tech workers and tech management. Workers for years were drawn to Silicon Valley for its idealistic values, perks and job security, but since 2022, tech companies have cut back on benefits and conducted on-going rounds of layoffs.

Google, for example, informed some employees who were previously approved for remote work that they needed to return to the office if they want to avoid getting caught in layoffs, CNBC reported last month.  

Being in person more frequently is better for collaboration, innovation and company culture, Uber told CNBC in a statement.

“It’s hardly a surprise that not everyone was thrilled about changes to remote work and sabbatical policies,” the company said. “But the job of leadership is to do what’s in the best interest of our customers and shareholders.”

After Uber announced the changes in a memo last week, employees flooded the company’s internal Slido forum with questions and comments.

“The Slido essentially has been invaded by questions about the changes we’ve made,” Khosrowshahi said at the beginning of meeting, adding that the questions had been consolidated.

“How is five years of service not a tenured employee? Especially when burnout is rampant in the org,” a highly-rated comment from one employee said, adding that they had already paid for a trip for their upcoming sabbatical.

Khosrowshahi said Uber is a “Gen-AI powered company” that needs to be on its A game. He said employees should be more interested in learning and their impact on the company than on its benefits, which spurred more employee pushback.

Some questions asked if Uber made policy changes in hopes that it would force some people to quit.

“It has nothing to do in terms of a need to drive attrition or layoffs,” said Khosrowshahi, adding that the changes had nothing to do with cost cutting. “None of that is planned. The business is operating really, really well. But listen, good isn’t good enough for us. We have to be great as a company.”

Uber will report its first quarter financial results Wednesday.

Nikki Krishnamurthy, Senior Vice President, Chief People Officer of Uber.

Courtesy: Uber

After the all-hands meeting, Uber Chief People Officer Nikki Krishnamurthy sent out a memo saying some employee comments on the meeting broadcast “crossed the line into unprofessional and disrespectful.” 

“That’s not O.K., and we will be speaking with the employees who made them,” Krishnamurthy wrote, according to the memo which CNBC viewed. “Through good times and bad, we are open with each other. Yet when we see behavior like this, it makes it harder to continue being open in the same way.”

Uber in 2022 established Tuesdays and Thursdays as “anchor days” where most employees must spend at least half of their work time in the company’s office and the rest of the week could be spent working remotely for “individual productivity,” according to a now-removed blog post

“Our business also exists in the real world, on the streets of thousands of cities, and it’s important we stay connected to the places we serve,” Krishnamurthy wrote at the time.

On the company forum, several employees questioned the change to three days in-office, citing insufficient meeting rooms and work space, according to comments viewed by CNBC.

“It’s a challenge every anchor day to even find a place to sit with your team,” one employee comment said. 

The goal of anchor days is “to get as many people in the office as possible,” Khosrowshahi said, adding that Uber will be keeping track of employee attendance.

Krishnamurthy addressed the concerns about office space at the company meeting, announcing that Uber is adding 700,000 square feet of office space between its San Francisco Mission Bay and Seattle offices. The additional space will go toward more meeting rooms and cafeterias, said Krishnamurthy, adding the retrofitting will be in construction through 2026.

WATCH: Uber raises in-office requirement to 3 days, claws back remote workers

Uber raises in-office requirement to 3 days, claws back remote workers

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SpaceX gets FAA permission for fivefold increase in Starship launches from Texas

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SpaceX gets FAA permission for fivefold increase in Starship launches from Texas

The Super Heavy booster returns to its launch pad after the SpaceX Starship continued to space after it was launched on its eighth test at the company’s Boca Chica launch pad in Brownsville, Texas, U.S., March 6, 2025. 

Joe Skipper | Reuters

SpaceX has been granted permission by the Federal Aviation Administration to launch and land its massive Starship rockets and Super Heavy boosters up to 25 times per year from the company’s Starbase spaceport in Texas.

The aerospace and defense contractor run by Elon Musk was previously restricted to five Starship launches per year from the site. While SpaceX submitted the proposal to increase its launch cadence on the Texas Gulf Coast during the Biden administration, a final environmental assessment was just announced on Tuesday, more than three months into President Donald Trump’s term.

Musk has been a central figure in President Trump’s second administration, leading an effort to shrink the federal government and regulatory agencies, including those that oversee his companies.

The decision that the FAA announced on Tuesday is one piece of the agency’s license review process for launches.

“There are other licensing requirements still to be completed,” the FAA said in an emailed statement, with ongoing reviews that pertain to “policy, payload, safety, financial responsibility and environmental impacts.”

“Once the evaluation process is complete, the FAA will make a determination to approve or deny the license application,” the agency said.

In its final environmental assessment, the FAA decided that SpaceX’s proposal for more launches from Boca Chica, Texas, would have “no significant impact” to the environment in the vicinity. The determination follows a string of SpaceX Starship test flights and explosions, and legal clashes between the company, environmental groups and the FAA.

SpaceX's Starship rocket explodes a few minutes after the launch

SpaceX originally designed its Starship rockets with the goal of launching cargo, and as many as 100 people at a time, to space. Musk has long promised SpaceX would conduct manned missions to Mars in the near future with Starship, though a realistic timeline for his goal remains elusive.

SpaceX’s first integrated Starship vehicle launched from the Boca Chica facility in April 2023, and exploded mid-flight. The U.S. Fish and Wildlife Service soon disclosed details about the aftermath of that explosion, including that a “3.5-acre fire started south of the pad site on Boca Chica State Park land,” following the test flight. Fire and debris destroyed nests, eggs and fragile habitat of endangered species in the area, the New York Times reported.

The next month, the Center for Biological Diversity and other environmental advocates, sued the FAA over purportedly inadequate environmental reviews before granting SpaceX permission to conduct those launches.

By August 2024, Texas state and federal environmental regulators had fined SpaceX after determining the company had violated the Clean Water Act at Starbase, repeatedly polluting waters in the area. Musk then threatened to sue the FAA for “regulatory overreach” when the agency said it would levy fines against SpaceX after alleged licensing and safety-related violations during two other launches in 2023.

Musk didn’t sue, however. Instead, he spent almost $300 million to propel Trump back to the White House.

A senior attorney with the Center for Biological Diversity, Jared Margolis, said in an email to CNBC on Tuesday, that his group was “incredibly disappointed, though not surprised, that the FAA has allowed SpaceX to drastically increase the number of launches and the associated harm to an ecologically critical area without taking the time to fully analyze and mitigate the impacts to the community and wildlife.”

A SpaceX spokesperson didn’t respond to a request for comment.

The decision by the FAA comes days after SpaceX won an election over the weekend to incorporate Starbase as its own city. The mayor and two city commissioners both come from SpaceX’s employee ranks.

WATCH: SpaceX scrubs launch of mission to replace stranded astronauts

SpaceX scrubs launch of mission to replace astronauts stranded on International Space Station

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