Update: The story was updated with a statement from Arm, and stock price movement.

British chip architecture designer Arm (NASDAQ:ARM) expects its global market share in data center central processing units to grow to 50% by the end of 2025, compared to 15% in 2024, with gains steered by a boost in AI.

Shares of Arm fell about 3% on Monday.

"In this unprecedented age of AI transformation we are seeing an insatiable demand for computing, with AI servers set to grow by more than 300% in the next few years. For that to scale, power-efficiency is no longer a competitive advantage - it is a baseline industry requirement. This is where the Arm Neoverse compute platform is the clear leader, and the compute platform of choice for industry-leading partners including AWS, Google, Microsoft and NVIDIA,” said Mohamed Awad, Senior Vice President and General Manager, Infrastructure Line of Business, Arm, in a statement to Seeking Alpha.

In many cases, Arm's technology offers lower power consumption than processors made by Intel (INTC) and Advanced Micro Devices (AMD), said Awad to Reuters.

Awad noted that data center chips often use more of Arm's intellectual property and the company usually receives "a lot higher aggregate royalty rate" than chips for less complex devices, according to the report.

Arm does not make chips itself but sells and licenses the building blocks and intellectual property to companies, including Apple (AAPL) and Nvidia (NVDA), for use in designing chips for smartphones, laptops, and data center processors.

"We've gotten to the point where software is actually being developed for Arm first and foremost," Awad noted.

In December last year, Amazon (AMZN) said its self-built data center CPUs with Arm tech accounted for over half the capacity for chips it added over the past two years, the report added.

Microsoft (MSFT) and Alphabet's (GOOGL) (GOOG) unit Google have also made Arm-based data center chips, though their efforts are more recent than Amazon's, the report noted.

Last month, Arm's fiscal fourth-quarter outlook came in line with estimates but royalties missed expectations. However, the third-quarter results had drawn praise from Wall Street analysts.