Arm's decision to manufacture its own chips marks a significant shift in its business model and could reshape the competitive landscape of the semiconductor industry. Traditionally, Arm has focused on licensing its processor blueprints to companies like Apple, Nvidia, and Qualcomm, which then use these designs to create their own CPUs. However, with its new venture into in-house chip production, Arm is positioning itself as a direct competitor to some of its biggest clients.
A key driving force behind this move appears to be its partnership with Meta, which is reportedly set to become Arm's first major customer for its in-house chips. The new processors will be designed for large-scale data centers, allowing companies like Meta to optimize their AI and cloud computing infrastructure. By producing its own chips, Arm will enter direct competition with Intel and AMD, both of whom currently dominate the server CPU market.
SoftBank, Arm’s primary owner, is reportedly backing this strategic shift as part of a broader plan to bolster AI infrastructure. Masayoshi Son, CEO of SoftBank, has been pushing for AI-focused investments, which aligns with the company’s recent collaboration with OpenAI on Project Stargate. This $500 billion initiative aims to build AI infrastructure in the United States, and Arm’s upcoming data center chips could play a crucial role in supporting those operations. With an initial $100 billion already invested, SoftBank’s long-term vision seems to involve vertical integration, where it not only funds AI development but also provides the necessary hardware.
Adding further credibility to Arm’s chip-making ambitions is its recent recruitment strategy. Reports indicate that the company has been actively hiring executives from its licensee companies to accelerate its transition from a design-focused firm to a full-fledged chip manufacturer. A recruitment note obtained by Reuters suggests that Arm is particularly interested in hiring experts who can lead the company’s transformation and focus on AI-driven data center solutions.
Arm's entry into chip manufacturing also brings it into competition with Qualcomm, a company with which it has had legal disputes over licensing agreements. While Arm previously threatened to revoke Qualcomm’s license due to disagreements over custom chip technology, the conflict appears to have eased, with Qualcomm’s CEO confirming that the threat has been withdrawn. However, as Arm begins selling its own chips, its relationship with long-time partners like Qualcomm could become more complex.
By stepping into the chip manufacturing business, Arm is taking a bold risk. While its processor designs have long been the backbone of mobile and computing technology, venturing into production puts it in direct competition with industry giants. If successful, this move could make Arm a key player in AI and data center computing, but it will also require significant investment and execution. The semiconductor industry is notoriously competitive, and Arm will have to navigate supply chain challenges, pricing pressures, and customer relationships carefully.
With its first in-house chip expected to debut this summer, the industry will be watching closely to see how Arm’s new strategy unfolds and whether it can successfully carve out a space in the growing market for AI and cloud computing processors.
