Arm’s business shift mirrors Nvidia’s model, where chip designs are developed in-house but actual manufacturing is outsourced to foundries like TSMC. This approach allows Arm to enter new markets while reducing capital expenditure on chip fabrication. However, the move could create tensions with long-time partners like Apple, Qualcomm, and Nvidia, who must now consider whether their reliance on Arm’s technology puts them in direct competition with it.
“Arm already holds a near-monopoly in certain semiconductor IP segments, and regulators closely scrutinize its licensing policies and potential acquisitions,” Rao noted. “If Arm expands further into direct chip sales, regulators may require a clear separation between its IP licensing and chip manufacturing divisions. Any perceived preference for its own products or sudden licensing fee hikes could invite antitrust investigations.”
“As AI chip development accelerates, chipset makers will likely pursue both backward and forward integration, aiming to control more of the design and development process while still relying on foundries for manufacturing,” said Faisal Kawoosa, founder and lead analyst at Techarc. “Arm’s move into chipmaking is a natural response to this trend, but it also introduces challenges. Competing with firms like Nvidia and Qualcomm requires more than just strong design expertise—it demands deep market knowledge, customer relationships, and extensive front-end integration, areas where its competitors currently have an edge.”
