Arm Sees Growing Opportunity in Southeast Asia
The company aims to expand in Southeast Asia after announcing a $250 million partnership with Malaysia earlier this year
- Arm, a British chip designer, wants to expand its presence in Southeast Asia due to rising demand for data centers and artificial intelligence.
- Arm’s expansion plans follow a $250 million partnership with Malaysia to develop locally made semiconductor products and collect royalties.
- Arm sees tariffs as a sign of a maturing market, where countries want to control and solve their own problems nationally.
British chip designer Arm ARM 0.70%increase; green up pointing triangle wants to do more in Southeast Asia, its chief commercial officer says.
The market has huge potential as demand for data centers and artificial intelligence rises, said CCO Will Abbey, who has been at SoftBank-backed Arm since 2004.
Arm is aiming to expand in Southeast Asia after announcing a $250 million partnership with Malaysia earlier this year—its first ever with a country. Abbey sees opportunity for a similar tie-up with Singapore.
“We see Southeast Asia as a hotbed of activity, and we’d like to do more in this region,” he said in an interview on the back of the Fortune Brainstorm AI Singapore. “Demand is still growing.”
Arm is one of the many big tech names looking to the region for business opportunities.
Southeast Asia has been drawing in billions of dollars in data center and AI investments from tech giants like Microsoft, TikTok owner ByteDance, and Google as demand surges. Analysts say the region’s neutral geopolitical stance is part of its appeal, particularly during times of heightened geopolitical tensions.
Part of the demand comes from the need to host data domestically.
There is an “urgency for Southeast Asian players to build AI-ready data centers…to ensure that data and infrastructure remain on shore in a world of growing geopolitical tensions where data is the new currency,” Deloitte said in a recent report.
Under the partnership with Malaysia, Arm is providing intellectual property licenses and technology. It will also facilitate the development of locally made semiconductor products, and will collect royalties on chips sold.
For Malaysia, the end goal is to sell “Made by Malaysia” AI chips, Prime Minister Anwar Ibrahim said earlier this year.
Shares of Nasdaq-listed Arm have come under pressure this year due to concerns that tariffs will hurt the semiconductor market. The company withheld guidance for the year, adding to worries about how the macroeconomic environment could hurt demand.
Arm generates revenue from licensing fees for its chip designs, and collects royalties on every chip shipped. About 10%-20% of the royalty revenue comes from U.S.-bound shipments, and China is one of its largest customers.
Arm has said tariffs will likely have only a limited direct impact on royalty and licensing revenue, but warned it was getting more difficult to predict end-demand.
Clients like Nvidia and Apple face more direct hits from tariffs, and rising cross-border trade costs could ultimately crimp Arm’s revenue stream.
But Abbey sees some silver linings.
Tariff barriers are a sign of a maturing market, he said, one in which “state actors, countries start to think about how do I take control, how do I build and solve my own problems nationally.”
Ever since the Covid-19 pandemic, semiconductors have “become a real critical national level strategy that you need to think intelligently about,” Abbey said.
Countries’ push for self-sufficiency in tech should boost demand for AI computing, buoying demand for Arm’s technology, he added.
Rather than having hosted services from large-scale cloud infrastructure providers, countries are thinking: why not build compute capacity for themselves, he said, calling data “the new oil.”