Arm will compete with its own customers. The company is said to be launching its own chip this summer, with Meta as its first customer.
Arm is going to compete directly with its own customers. The company is working on an ARM-based chip that would be unveiled this summer. That is what the Financial Times knows. The company is said to have already convinced Meta to buy the chip. Given Arm’s expertise, and Meta’s ambitions, the proprietary component presumably involves a CPU for servers.
Surprising twist
The move is surprising. Arm earns the cheese on its bread and butter by developing ARM designs for processors. Customers license those designs, and build their own chips with them. For example, MediaTek makes processors containing Cortex cores, and its Neoverse designs are a popular basis for companies looking to develop their own server chips. Think Graviton from AWS, Axion from Google and Cobalt from Microsoft.
Arm’s business model has traditionally been based on neutrality. The company develops the blueprints, and customers go with them. The chips based on the ARM designs differ among themselves, as customers add their own touches. Arm’s customers are competitors among themselves, but Arm itself has always been a neutral partner.
That changes with the introduction of a proprietary chip. Suddenly Arm is building the designs itself into finished processors, eliminating neutrality to customers.
In search of profits
Arm itself is not happy with the evolution of the ARM architecture. The company is not capitalizing sufficiently on its growing popularity. ARM in the laptop, for example, is driven by Qualcomm, which licenses the architecture but does not adopt direct designs. Arm recently put an end to a lawsuit surrounding that situation.
By building its own chip, Arm hopes to get a bigger slice of the cake. Arm is owned by Japan’s Softbank, which has already made several attempts to capitalize more on the originally British company. A takeover of Arm by Nvidia failed grandly in 2022 and around the IPO it has been quiet since late 2023.
Proprietary chips seem to be a new strategy to achieve more sales. Softbank would therefore like to acquire Ampere, which already has experience with ARM-based server chips. The future for Arm is thus shaping up more and more clearly, with less room for neutrality. How customers will react is unclear. After all, paying for ARM designs from a neutral partner is one thing, but paying for those same designs when the money is pumped directly into competing products is another.