Arm, the chip and software company you lead, is doing well: since its IPO in September 2023, your market value has increased 2.5 times. Where do you think future growth will come from?

Our business model has two components: getting a license to use our technology, and then customers paying us royalties. Some chips have one Arm microprocessor; some have hundreds, which means we collect more royalties. Since every digital device is based on Arm, it is a very healthy and highly sustainable growth driver.

Yes, your company estimates that 99% of "high-end smartphones" run on Arm central processing units (CPUs). Why is Arm’s architecture so indispensable?

The CPU not only runs the operating system (Android, iOS) but also all the applications, be it Excel, PowerPoint, WhatsApp, Gmail. The software was designed from the ground up to run on Arm, and converting to other CPUs is a daunting task. That's what keeps us sticky - it's just running all this software.

Artificial intelligence software is developing extremely rapidly, far ahead of hardware. Does this mean a massive upgrade cycle is required?

This will require a massive upgrade cycle. If you think about these new AI models, the chips[that run them]were designed years before they were invented, so they're not as well optimized. It drives rapid upgrade cycles, and the people building these systems need to have more powerful chips.

Designing a CPU that can run both traditional and cutting-edge technologies must be challenging.

that's right. When you think about the next upgrade cycle for your phone, your PC, or even your smart TV, it had to run all the old software perfectly, and now it needs to run the new artificial intelligence software that was just invented. In our business, what really helps us grow is the insatiable need for more computing power. So it's a good pressure.

The need for computing also means a need for energy; AI data centers are very energy-hungry. What steps are you taking to support sustainability?

Arm is the world's most energy-efficient CPU because it's in our DNA to build processors that run on batteries. That's why our technology is now making its way into laptops, data centers, and why Nvidia is moving to 100% Arm-based chips for its most advanced AI platform. Everyone wants to keep the same energy level to do more calculations. It's difficult because AI is advancing so quickly, but we are playing our part.

Masayoshi Son, chairman and major shareholder of Arm and founder of SoftBank, is betting that super artificial intelligence (ASI) will become "10,000 times smarter" than humans within a decade. do you agree?

Computers are already able to think and reason like humans. These acronyms—ASI, AGI (Artificial General Intelligence)—everyone has different criteria. But by the end of the decade, I think we're going to see some very significant changes related to computers doing jobs that humans do, whether it's call centers (or) writing software.

Some, like TSMC founder Chang Chung-mou, have been very critical of attempts to bring chip manufacturing back to the United States. Do you think the CHIPS Act has gone far enough?

Because of the sheer scale of building these manufacturing sites, we will need a second CHIPS Act, a third CHIPS Act, and a fourth CHIPS Act. Government funding of fabs also exists in other parts of the world, so I think it's good for the U.S. to be involved because every country is going to need some level of industrial policy around semiconductors in the future.