British chip designer Arm Holdings shares fell approximately 5% on Thursday. This decline erased more than $12 billion in market value. The sell-off occurred despite the company reporting record quarterly revenue and a strong financial forecast.
Management warned of a softening smartphone market where Arm designs currently dominate. The company also revealed manufacturing supply shortages for its new artificial intelligence chips.
CEO Rene Haas confirmed Arm secured manufacturing capacity for the first $1 billion in AI chip demand. However, the company has not yet secured the supply needed to meet orders exceeding that initial amount.
These supply concerns overshadowed a year-to-date performance where shares had more than doubled. The stock hit an all-time high the previous day before the Thursday pullback.