Shares of Arm Holdings plunged 12% on Thursday after the chip designer offered muted guidance for earnings.

Second-quarter adjusted earnings will be between 29 cents and 37 cents per share, Arm said late Wednesday. Wall Street had projected 35 cents per share.

The company forecast second-quarter revenue of $1.01 billion to $1.11 billion, which was in line with consensus estimates of $1.05 billion.

The concerning outlook was amplified by commentary from Arm CEO Rene Haas, who indicated the company is considering designing its own processors. Arm has made its name selling the architecture behind the chips powering devices made by the likes of Microsoft and Amazon.

“We’re looking now at the viability of moving beyond the current platform to additional subsystems, chiplets or possibly full solutions,” Haas said.

The disclosure left investors “with more questions than answers,” Wells Fargo analysts wrote in a Thursday research note.

By developing its own chips, the company’s cost structure will likely undergo a “major change,” Needham analysts wrote.

“While we view ARM’s transition from selling process core IP to selling CSS was largely successful, as evidenced in above-market royalty revenue growth, the next transition appears to be a much bigger leap, which will likely come with a bigger price,” the analysts added.

For the fiscal first-quarter, the company posted adjusted earnings per share of 35 cents on revenue of $1.05 billion. Analysts were expecting earnings of 35 cents and revenue $1.06 billion.

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