* Arm's AGI CPU targets agentic AI market

* Meta Platforms ( META ) is lead partner for AGI CPU

By Max A. Cherney

SAN FRANCISCO, March 24 (Reuters) - Arm Holdings

announced a new artificial intelligence data center chip on

Tuesday which it said will add billions of dollars of revenue

and represent a significant shift in the company's strategy.

The new chip, called the AGI CPU, will address

data-crunching needed for a specific type of AI that is able to

act on behalf of users with minimal oversight, instead of

responding to queries as part of a chatbot.

So-called agentic AI has jumpstarted demand for the central

processing units (CPUs) produced by the likes of Intel ( INTC )

and Advanced Micro Devices ( AMD ).

For years, Arm, majority-owned by Japan's SoftBank Group

, has relied only on intellectual property for revenue,

licensing its designs to companies such as Qualcomm ( QCOM ) and

Nvidia ( NVDA ) and then collecting a royalty payment based on

the number of units sold.

Last year, Arm signalled to investors it was investing in making

its own chip, a process that can cost hundreds of millions of

dollars, and that the company had hired key executives to assist

with the effort. The AGI CPU will be the first chip under that

new strategy.

"It's a very pivotal moment for the company," CEO Rene Haas

said in an interview with Reuters.

The new chip will be overseen by Mohamed Awad, head of the

company's cloud AI business, and Arm has additional designs in

the works that it plans to release at 12- to 18-month intervals.

Meta Platforms ( META ) will be the company's lead partner

for the AGI CPU and the two companies worked together on the

design. Arm's customers for the new chip include ChatGPT maker

OpenAI, Cloudflare ( NET ), SAP and SK Telecom ( SKM )

.

Taiwan Semiconductor Manufacturing Co ( TSM ) is

fabricating the device on its 3-nanometer technology and is made

from two distinct pieces of silicon that operate as a single

chip. Arm plans to put it into volume production in the second

half of this year but has received test chips that function as

expected.

"It's back, and it works, and it's doing everything we

thought it would," Haas said, referring to the new chip.

In addition to the chip itself, Arm is working with server

makers such as Lenovo ( LNVGF ) and Quanta Computer ( QUCCF ) to

offer complete systems.

For its current fiscal year, Wall Street expects Arm to

generate a net profit of $1.75 per share on revenue of $4.91

billion, according to LSEG estimates.

(Reporting by Max A. Cherney in San Francisco; Editing by

Muralikumar Anantharaman)