Arm’s growth prospects and strategic priorities in the automotive sector

Chip designer Arm has wowed investors with its strong price performance since returning to the public markets in September 2023. Driven by artificial intelligence, Arm's stock price has risen about 66% so far this year and has more than doubled since its IPO last year. As the company's customer list continues to expand, Arm's growth prospects are becoming more and more promising, especially in the automotive field.

The automotive industry is considered one of Arm's fastest-growing areas, both in terms of the growth rate of revenue in the field and the company's investment in future markets. Almost all major semiconductor manufacturers, including Nvidia, Apple, and Qualcomm, are using Arm's designs. Although Arm is well-known for its mobile phone technology, CEO Rene Hass said that the automotive field has become a key focus of the company as the demand for high-performance chips in the era of smart cars increases.

Although the automotive business is a smaller portion of Arm's overall business, it is one of the fastest growing in terms of revenue, and in fact about 85% of IVI and 50% of ADAS systems are already based on Arm. The new product range for automakers is designed to consolidate Arm's position in the market. In this growth story, Dipti Vachani, head of Arm's automotive business, dives into the company's strategy and why the automotive sector is seen as a pillar of future success.

Vachani emphasized that now is a great time to enter the automotive industry. Cars are undergoing a major transformation, including the popularization of electrification and autonomous driving technology. Consumers expect to enjoy an experience similar to that of mobile phones in the car, which provides a huge opportunity for Arm. Arm's traditional advantages lie in low power consumption and high-performance technology, combined with the investment in security over the past 20 years, providing a wide range of products for the automotive industry.

Vachani also mentioned how Arm's mobile roots affect its vision for cars. She believes that Arm must provide two aspects of products: one is mobile phone chips, which provide true low power consumption for optimal performance; the other is infrastructure assets, which provide maximum performance. The combination of these two aspects aims to provide the best products in the automotive field.

For investors, Arm's real opportunity in the automotive sector lies in its ability to provide a complete solution, including assets such as infrastructure, cloud, functional safety, and the ability to immediately enable software development, which will help the company expand its position in the automotive industry.

Vachani also discussed some of the challenges faced by Arm's partners and the impact they will have on the end market. She pointed out that as cars become more complex, OEMs need more computing power and security. Arm helps OEMs meet these challenges by providing a large ecosystem, including software providers, chip providers, and Tier1.

Looking ahead, Vachani said that Arm's biggest strategic focus is to work with OEMs to help them achieve the biggest transformation in the software-defined car and electric vehicle space. She emphasized that enabling OEMs to easily create solutions and software-defined vehicles is critical to the company's growth.

Overall, Arm's growth prospects in the automotive sector are promising, and the company is driving the transformation of the automotive industry through technological innovation and extensive cooperation with partners. With the popularization of electrification and autonomous driving technology, Arm is expected to continue to expand its influence in the automotive market in the coming years.