The hand logo displayed on the screen and the microchip are seen in this illustrative photo taken in Krakow, Poland on September 14, 2023.

Jakub Pozhicki | Nurphoto | Getty Images

SoftBank Group subsidiary hand plans to release artificial intelligence chips by next year, according to a Nikkei Asia reportas the battle for AI chip dominance intensifies.

The UK-based chip designer, in which SoftBank has a 90% stake, will set up an AI chip unit to build a prototype by spring 2025, according to Sunday’s report.

SoftBank is in discussions with contract manufacturers, including Taiwanese TSMC to manufacture AI chips, the report added. Mass production is scheduled to begin in the fall of 2025.

Arm designs the underlying architecture on which the chips are built. It then sells licenses to its design to companies like Qualcomm and Nvidia, charging a fee for each sale they make. The company claims 99% of premium smartphones are powered by Arm technology.

The company will bear the initial development costs of the AI ​​chips, which could reach “hundreds of billions of yen,” according to the report. Once a mass production system is established, Arm’s AI chip business could be “separated and placed under SoftBank’s leadership.”

Arm shares are up nearly 45% so far this year, and its market capitalization is more than $113 billion, according to LSEG data. The company was acquired by SoftBank in 2016 for $32 billion and listed on the Nasdaq last year.

Founded and led by Japanese billionaire Masayoshi Son, SoftBank is betting big on AI and it is reported plans to invest $960 million by next year to improve its computing facilities for generative AI. In June, Son said SoftBank wanted to “be [in] the leading position for the AI ​​revolution.”

SoftBank aims to build AI data centers powered by its own chips in the US, Europe, Asia and the Middle East as soon as 2026, the Nikkei said.

SoftBank is set to report earnings for the fiscal year ended March 31 on Monday.

Read on full report of Nikkei Asia.