Arm Considers Shifting to Chip Development, Competing with Qualcomm & NVIDIA

As early as 2023, rumors began circulating that chip design firm Arm was contemplating developing its own chips. Traditionally, Arm’s core business has revolved around designing chip architectures and circuitry, licensing its intellectual property (IP) to clients rather than manufacturing hardware itself.

Companies like Qualcomm and MediaTek purchase Arm’s technology licenses to design their own chips, which are then fabricated by semiconductor foundries such as TSMC and ultimately sold to downstream hardware manufacturers, including smartphone makers. This well-defined division of labor places Arm at the foundation of the technology stack, while chipmakers handle customization and hardware companies purchase the final products.

However, should Arm embark on developing its own chips, it would disrupt this established structure. By designing and customizing its own silicon, Arm could directly supply chips to smartphone manufacturers—effectively positioning itself as a direct competitor to current customers like Qualcomm and MediaTek.

NVIDIA, too, would find itself in competition. The company is presently working with MediaTek on developing processors for Windows 11 PCs based on Arm architecture, and it already uses Arm’s technology to build server chips. Any move by Arm into the finished-chip market would encroach on NVIDIA’s territory as well.

Arm CEO Rene Haas remarked:

“We are consciously deciding to invest more heavily – (in) the possibility of going beyond (designs) and building something, building chiplets or even possible solutions.”

Haas noted that producing complete chips would be a high-risk venture with no guaranteed success, and would likely erode profit margins. Developing state-of-the-art AI chips, for example, can incur costs exceeding $500 million, not including the even steeper expenses required to build the supporting server infrastructure and software ecosystem.

Of particular note, Haas revealed that Arm is exploring the full ecosystem surrounding chiplets—not limited to the physical silicon, but encompassing circuit boards, software systems, and potentially the ancillary systems required to support them. The ultimate ambition, he stated, is to create a comprehensive and self-sustaining technological ecosystem.

Several years ago, NVIDIA attempted to acquire Arm, but the deal was abandoned after failing to gain regulatory approval. In the aftermath, Arm opted for a public listing on the London Stock Exchange. Since going public, the company has shown a heightened appetite for profitability, adopting strategies such as raising licensing fees for its IP portfolio.

The idea of designing its own chips and competing with longtime partners like Qualcomm emerged in the wake of the failed acquisition. If successful, such vertical integration could significantly boost Arm’s profit margins—an outcome that pure IP licensing alone may no longer be able to achieve.

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