Arm Holdings to Sell Its Own Chips. Some Customers Could Become Rivals. -- Barrons.com

By Adam Levine

Arm Holdings has crossed the Rubicon. In announcing a new data center CPU chip on Tuesday, it is putting itself into direct competition with its customers, notably Nvidia, Amazon, Alphabet, and Microsoft.

At its core, Arm makes intellectual property that chip makers license to build their own chips. Arm customers also include Apple, Qualcomm, Samsung, and Broadcom. Just about every smartphone, tablet and even Mac computers run on top of Arm designs.

But Arm has never before made a chip.

"AI has fundamentally redefined how computing is built and deployed," said Arm CEO Rene Haas in a press release. "Today marks the next phase of the Arm compute platform and a defining moment for our company."

Meta Platforms, OpenAI and smaller players will be the first customers for the chip, called Arm AGI CPU. Arm shares were up 1.3% in midday trading on the news.

"Delivering AI experiences at global scale demands a robust and adaptable portfolio of custom silicon solutions, purpose-built to accelerate AI workloads and optimize performance across Meta's platforms, " said Meta head of infrastructure Santosh Janardhan in a statement. "We worked alongside Arm to develop the Arm AGI CPU to deploy an efficient compute platform that significantly improves our data center performance density and supports a multi-generation roadmap for our evolving AI systems."

These new chips will compete with data center CPUs from Intel and Advanced Micro Devices, which are based around different intellectual property called x86, and also other Arm-based chips at the big cloud companies.

Previously used only in low-power devices, Amazon Web Services introduced Arm into the data center with its first Graviton CPU chip in 2018. Microsoft has its Cobalt Arm chip in the Azure cloud, and Google Cloud has the custom Axion CPU. Nvidia's Grace and Vera Arm-based CPUs populate its industry-leading artificial-intelligence servers.

This represents the most dramatic change in business model since Arm was founded in 1990 as an Apple joint venture with two smaller companies. The shift may anger customers, but there may be little alternative. x86 licenses from Intel and AMD are not forthcoming and the open-source RISC-V chip architecture may not be mature enough.

When queried about competing with customers at a press conference, Haas said, "It is a massive, massive market. We think there's room for lots of different players, so we're not really too worried about that."

The competition also opens up the question of who the customers for Arm AGI CPU will be when the largest buyers -- AWS, Azure and Google Cloud -- have their own CPUs.

Since Hass became CEO in 2022, Arm has been aggressively pursuing revenue growth through price hikes and bundling, and the latest gambit is another move to keep that momentum going. In the most recent quarter, Arm reported revenue growth of 26% from the previous year.

Write to Adam Levine at adam.levine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 24, 2026 15:19 ET (19:19 GMT)

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