Report: Arm to build its own chips, and Meta is first in line to buy them

Report: Arm to build its own chips, and Meta is first in line to buy them

The U.K.-headquartered chip design company Arm Holdings Plc. is
reportedly planning to launch its first-ever complete semiconductor
after securing Facebook’s parent company Meta Platforms Inc. as one of
its first customers.

In an exclusive report today, the Financial Times suggests that Arm is
[1]looking to build its own hardware for the first time, in a move that
will bring it into direct competition with many of its customers.

The company is an ubiquitous name in the chipmaking world, but it has
never made its own chips. Instead, it licenses to others a key
technology called an instruction set, which is a sort of blueprint for
building powerful and energy-efficient chips. More recently, though,
the company has begun selling more complex core designs that customers
can customize more easily.

Arm’s unique status in the chipmaking industry has helped it to earn a
nickname as the “Switzerland” of chip technology firms, as it has
always been perceived as dealing with customers such as Apple Inc.,
Nvidia Corp., Qualcomm Inc., Intel Corp., Amazon Web Services Inc. and
Microsoft Corp. neutrally, never favoring any particular company.

But that could change, as the massive amounts of money being spent on
artificial intelligence chips prove too tempting for the company to
ignore. Meta alone has said it’s planning to [2]spend up to $65 billion
on AI infrastructure this year, and though much of that money will be
spent on Nvidia’s graphics processing units, it will also buy plenty of
others, including central processing units from the likes of Intel and
Advanced Micro Devices Inc. It’s also thought to be working on its own
chip designs.

The Financial Times says Arm is looking to design a CPU for servers,
rather than compete with Nvidia and AMD in the GPU market.

Nvidia tried to acquire Arm from its owner SoftBank Group Corp. in 2020
for $40 billion, but [3]the deal was blocked on regulators’ concerns
about Arm’s key role in the chip market. Arm responded by instead
[4]going public, and its market capitalization has since grown to more
than $173 billion. SoftBank remains its biggest shareholder.

This year already, Arm’s stock has increased 29%, as it’s increasingly
seen as a key enabler of AI systems. The company’s executive team has
told investors that it’s looking to sell more advanced technology to
customers, as part of a plan to expand its revenue streams.

The move to build its own chips is not really so surprising, as
SoftBank founder Masayoshi Son has made Arm the centerpiece of his
plans to create a vast infrastructure network for AI. Last month, Son
appeared at the White House alongside U.S. President Donald Trump,
OpenAI Chief Executive Sam Altman and Oracle Corp. founder and Chief
Technology Officer Larry Ellison, where they [5]unveiled the Project
Stargate initiative, which plans to invest $500 billion in AI
infrastructure. SoftBank and Abu Dhabi state fund MGX will provide much
of the funding, and Arm was also revealed as a technology partner for
that initiative.

Another clue came from Arm CEO Rene Haas (pictured) during the
company’s latest [6]financial earnings call earlier this month, when he
cited the spending plans of Meta, Google (which will [7]invest $75
billion on AI infrastructure) and Microsoft (which [8]will spend $80
billion) as a big opportunity for the company.

“No one is pulling back,” Haas pointed out, referring to how those
giants are doubling down on their AI spending amid the rise of Chinese
AI startup DeepSeek Ltd.

Moreover, SoftBank is currently [9]trying to acquire another chipmaker,
Ampere LLC, which is heavily backed by Oracle and makes CPUs for data
center servers. According to the Financial Times, that deal is critical
to Arm’s plans to build its own chips.

Though the profits from selling its own chips could be extremely
lucrative, Arm also risks alienating some of its major customers if it
goes ahead with this move, said analyst Rob Enderle of the Enderle
Group.

“Competing with your licensees is a good way to lose those licensees if
you’re not careful, and this does represent a risk to those customers
who license Arm technology,” the analyst said. “It means they’ll be
competing with Arm itself while also using its technology, but of
course, Arm will have a significant advantage as it owns that
technology.”

The decision could well be a calculated move for Arm, though, as the AI
industry is lucrative enough that it may be able to gain enough direct
sales to offset any licensing revenue it loses, Enderle added.

“There is always a risk when you license something, as the one who owns
the license may eventually decide it wants your revenue and profit, and
there is little recourse to such customers if it does decide to move in
on their turf,” he said.

Even so, Holger Mueller of Constellation Research Inc. said the move
appears to be a risky gamble for the company, as any switch from
operating purely on licensing revenue would dilute the company’s profit
margins.

“This will expose Arm to supply and production issues and greater stock
volatility due to the roller-coaster nature of chip market sales, and
it will upset its existing customers,” Mueller said. “It’s surprising,
but in any case Arm’s management is aware of all of this, so it must be
able to see an upside.”

The Financial Times suggests Arm may announce its plans by the summer
or possibly even earlier, but the company itself refused to comment on
the report.

However, it’s certainly clear which direction the industry is headed.
Four days ago, Reuters reported that OpenAI is looking to [10]develop
its own chips to reduce its reliance on Nvidia’s GPUs. It’s said to be
in the advanced design stage already, with the next step likely to
involve transferring that design to the Taiwanese semiconductor
manufacturer Taiwan Semiconductor Manufacturing Co. for experimental
production and testing.

Meanwhile, Forbes reported this week that Meta is [11]looking to
acquire the South Korean AI chip startup [12]FuriosaAI Inc. as part of
its own plan to develop an alternative to Nvidia’s GPUs. That deal
could close as early as this month, the report suggested.

Of course, the cloud infrastructure giants AWS, Google and Microsoft
have all developed their own AI accelerators, which they offer to cloud
customers as an alternative to Nvidia’s hardware.

Photos: [13]Arm/YouTube
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References

1. https://www.ft.com/content/95367b2b-2aa7-4a06-bdd3-0463c9bad008
2. https://siliconangle.com/2025/01/29/meta-crushes-wall-streets-profit-targets-zuckerberg-dismisses-deepseek-threat/
3. https://siliconangle.com/2022/02/07/nvidias-66b-acquisition-arm-off-regulatory-concerns/
4. https://siliconangle.com/2022/03/24/softbank-preps-arm-ipo-seeking-60-billion-valuation/
5. https://siliconangle.com/2025/01/24/new-details-emerge-project-stargate-meta-discloses-60b-ai-investment/
6. https://siliconangle.com/2025/02/05/qualcomm-arm-shatter-wall-streets-targets-investors-arent-happy/
7. https://siliconangle.com/2025/02/04/alphabets-stock-plunges-revenue-miss-high-ai-spending/
8. https://siliconangle.com/2025/01/29/microsofts-ai-revenue-grows-stock-falls-lower-guidance-concerns-spending/
9. https://siliconangle.com/2025/01/09/report-softbank-arm-acquire-server-chip-provider-ampere/
10. https://siliconangle.com/2025/02/10/openai-reportedly-finalizing-design-house-ai-chip-ahead-tsmc-fabrication/
11. https://www.forbes.com/sites/johnkang/2025/02/11/meta-in-talks-to-buy-korean-ai-chip-startup-founded-by-samsung-engineer/
12. https://siliconangle.com/2024/08/26/startup-furiosaai-debuts-rngd-chip-llm-ai-multimodal-inference/
13. https://www.youtube.com/watch?v=3pVVGBx6zvA
14. https://www.youtube.com/channel/UCu3Ri8DI1RQLdVtU12uIp1Q?sub_confirmation=1