Arm Holdings (NASDAQ:ARM) expects its data center central processing unit market share to reach 50% by the end of 2025, up from around 15% in 2024.

Arm’s infrastructure chief, Mohamed Awad, told Reuters that the UK-headquartered Arm’s technology, which is 90% owned by Japan’s SoftBank Group (OTC:SFTBF) (OTC:SFTBY), offers lower power consumption than Intel Corp. (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD) processors.

Awad noted that by consuming more of Arm’s intellectual property, data center chips entitled them to a higher royalty rate.

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Arm’s chips have become increasingly popular among cloud computing companies as AI data centers use electricity.

Arm stock plunged close to 20% in the last 12 months.

Arm last month reported third-quarter revenue of $983 million, up 19%, beating analyst estimates of $946.73 million. The adjusted earnings of 39 cents per share beat analyst estimates of 34 cents per share. Arm expects fourth-quarter revenue of $1.175 billion-$1.275 billion versus the $946.73 million analyst consensus. The company anticipates fourth-quarter adjusted earnings of 48 cents-56 cents per share versus 34 cents consensus estimate.

Arm’s foray into the chip sales market reportedly directly competes with its clients, including Qualcomm Inc. (NASDAQ:QCOM) and Nvidia Corp. (NASDAQ:NVDA), for AI and data center chip deals.

Price Action: ARM stock is down 5.83% at $101.51 at last check Monday.

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