By Reuters

(Reuters) - Arm Holdings (O9Ty.F) tumbled on Thursday on investor worries about the company's ability to secure sufficient supplies for its new AI ​chip to meet demand, overshadowing its strong forecast.

U.S.-listed shares ‌of the chip designer fell 5.6% to $224.05 in premarket trading after executives said late Wednesday that they had not secured enough supplies to meet the ​demand for a new chip.

Arm, which launched the ​chip called AGI CPU for so-called agentic AI ⁠earlier this year, had enough capacity to fulfill ​the first $1 billion of demand, but had not yet ​secured it for the second billion dollars' worth of orders, CEO Rene Haas said.

The company also predicted slightly negative numbers ​in smartphones during the call. Arm's designs power ​the majority of smartphones in the world, but a shortage of ‌memory ⁠chips has weighed on the industry, driving up prices of electronics and slowing sales.

Arm shares have more than doubled this year, outperforming other chip majors. The firm forecast first-quarter ​revenue above Wall ​Street expectations, banking ⁠on higher adoption of its chips.

A big portion of Arm's revenue comes from licensing its ​technology to companies such as Nvidia (NVDA.O) and ​Apple (AAPL.O) and collecting royalty payments on design use.

Morgan Stanley analysts said fourth-quarter royalties were weaker than expected, while the company's high ⁠operating expenditure ​growth trend was below expectations, suggesting the ​company was slowing the growing rate of spending for long-term needs.

Reporting ​by Twesha Dikshit in Bengaluru; Editing by Leroy Leo

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