Jul. 04, 2025 –
Arm Holdings’ [NASDAQ:ARM] core business is to license so-called reduced instruction set computer (RISC) architecture based CPU designs to chip designers, such as Apple or Qualcomm.
However, several companies have recently started developing CPUs based on a 100% royalty free open-source RISC architecture called RISC-V which can be used to achieve many of the same things Arm’s core products provide, of course cutting out any need to pay licensing fees to Arm. This could be a long-term threat to their business.
Those aware of Arm’s history may know that it was officially founded under the name Advanced RISC Machines in 1990, being spun out from the Cambridge-based Acorn Computers as a company to license their central processing unit (CPU) intellectual property (IP). This followed the development of the first “ARM” CPU by Acorn Computers in the 1980s, called the Acorn RISC Machine.
Since then, Arm Holdings have grown to a market capitalization of $175 billion, with most of their revenue coming from licensing RISC-type CPU cores, as well as some neural processing unit (NPU) and graphics processing unit (GPU) IP cores for use in (relatively) low power System-on-Chip (SoC) style silicon chips used in a plethora of electronic devices.
Whilst Arm’s IP is used in SoCs, they are often not the ones doing the actual design of the chips, rather their IP is used as a blueprint to speed up the design time and reduce the engineering cost of the actual chip designers, companies such as Broadcom, Texas Instruments or Mediatek.
For instance, one market where Arm does exceptionally is in smartphone SoCs, where they have a monopolistic grip on the CPU IP used. The Google Tensor G3 used in the Pixel 8 uses Arm CPUs, the HiSilicon Kirin 9010 used in the Huawei Mate XT uses Arm CPUs, even Samsung’s recent Galaxy S24 uses Arm CPUs. The Galaxy S24 uses a Qualcomm Snapdragon 8 Gen 3 chip or a Samsung in-house developed Exynos 2400 chip depending on what region the phone is distributed in, but both versions use licensed ARM CPU IP.
Many automotive chips also tend to use Arm CPUs, for example NXP sell the S32K series of chips to car manufacturers (NXP declared $7,484 million in revenue from the automotive market in 2023). The S32K series all use Arm CPU IP as the core of the chip. Anywhere you might need a low power, efficient but fast processor, you are likely to find Arm IP. This is partially because the CPU IP that Arm provides makes the chip design process much faster and cheaper for design companies by providing works-out-the-box CPU designs, and partially because Arm cores use a RISC based CPUs which tend to be power-efficient.