Arm takes manufacturing into its own hands as it plans to sell chips

British semiconductor giant Arm Holdings plc is planning to manufacture its own chips in 2025, according to the Financial Times and has started competing against its own clients for deals.

This move is part of a wider strategy aimed at increasing the company's revenues and profits. 

The company’s shares soared on the news by more than 6% on Friday morning. 

Arm has already secured Meta Platforms Inc. as one of its first clients. This is a marked change from what Arm currently does, which is providing the key intellectual property, such as blueprints, which companies like Nvidia and Apple then licence. This allows them to make their own central processing units (CPUs).

As reported by Reuters, Arm is seeking to poach executives from some of its current clients to assist with its "transformation from solely designing processor architecture (IP) to also selling its own silicon, with a focus on driving AI enablement in the data centre.”

Arm’s first chip is expected to be revealed as early as summer 2025, according to those familiar with the matter. 

The company is currently owned by Japanese investment holding company SoftBank Group. It licences and designs processor IP for a variety of products such as cars, smartphones and data centres.

It also works on innovating architecture, while offering development tools and enabling machine learning and artificial intelligence (AI) on a range of products. 

Arm Holdings has declined to comment. 

How could Arm’s new move disrupt the semiconductor industry?

Arm potentially launching its own chips could likely shake up the semiconductor industry, by making it a major competitor to other key players, when it comes to important data centre and artificial intelligence deals. 

Since Arm has mainly been seen as a neutral company so far, this move could also compel other companies, especially its clients, to reconsider their strategies in order to not lose out on deals. 

Currently, Arm is rivaling Qualcomm to provide data centre CPUs to Meta. Back in 2022, Arm also sued Qualcomm, claiming that the latter’s acquisition of the startup Nuvia went against Arm’s technology licence agreement terms. 

Under these circumstances, Arm believed that Qualcomm should have tried to negotiate a new contract. However, Arm subsequently lost this legal battle. 

Arm is also one of the key technology partners of The Stargate Project, along with Nvidia, Microsoft, OpenAI and Oracle. The Stargate Project aims to build the US’s AI infrastructure to further cement the country’s leadership in the sector. 

Another of Arm's clients, and potential competitor, Nvidia, has recently been rattled by the Chinese artificial intelligence startup DeepSeek launching its latest model, which was built relatively cheaply.

This has led to increased concerns about the future outlook for Nvidia and other similar AI companies. Since Nvidia is a major Arm Holdings client at the moment, this could also impact Arm.