SoftBank Group's Arm Holdings plans to develop artificial intelligence (AI) chips, seeking to launch the first products in 2025, according to reports.

UK-based Arm will set up an AI chip division and aim to build a prototype by spring 2025. Mass production will be handled by contract manufacturers and is expected to start in the autumn of 2025, as per reports.

Arm and SoftBank will split the potentially hundreds of billions of yen in upfront development expenditures.

According to reports, SoftBank may spin out and take over the AI chip business once a mass-production infrastructure is put in place. SoftBank is also reportedly in talks to secure production capacity with companies like Taiwan Semiconductor Manufacturing Corp (TSMC) and others.

The British chip manufacturer has been growing into the data center industry, where operators are trying to build their processors to power new AI models and lessen their reliance on main supplier Nvidia. The company licences its chip designs and makes money through royalties.

Since Arm's first public offering in September of last year, bets that the chipmaker will profit from a boom in AI computing have doubled its share price, valuing the company at almost $100 billion.

When SoftBank releases its earnings, it is anticipated to go back into the red. As the company has plenty of liquidity and may profit from its sizable ownership in Arm—whose share price nearly quadrupled in February due to excitement surrounding AI—investors are anxiously anticipating any new expansion investment announcements.