Arm Takes On Its Own Customers — Poaches Talent, Competes With Qualcomm And Nvidia For AI And Data Center Chip Deals: Report

British chip designer Arm Holdings Plc ARM is reportedly entering the chip sales market, directly competing with its own clients, including Qualcomm Inc. QCOM and Nvidia Corporation NVDA, for AI and data center chip deals.

What Happened: Arm, traditionally known for licensing its intellectual property to tech giants like Apple Inc. AAPL and Nvidia, is now looking to diversify its revenue streams by potentially selling its own chips.

Arm has been actively hiring executives from its licensees to support this new venture, reported Reuters, citing two sources familiar with the matter.

This strategic pivot could disrupt the industry, as Arm has traditionally been viewed as a neutral entity. The company’s legal battle with Qualcomm over licensing rates, which Arm lost, underscores the growing tensions, the report noted.

See Also: SoftBank-Backed Arm Plans Major Price Hike: Apple, Qualcomm Supplier Explores Chip Development

Arm could also be positioning itself as a competitor to Nvidia, according to JP Morgan analyst Harlan Sur. In a research note published Thursday, Sur mentioned that Broadcom Inc. AVGO has secured a contract with Arm and its parent company SoftBank Group SFTBF (SFTBY).

The deal involves developing a specialized AI chip designed to power SoftBank's data centers in Japan, potentially generating $30 billion in revenue.

Why It Matters: Arm is reportedly in competition with Qualcomm to supply data center CPUs to Meta Platforms, Inc. ARM (META.O). Earlier in the day it was reported that Arm has already secured a portion of this business, although discussions between Meta and Qualcomm are still ongoing.

Arm’s stock has experienced a remarkable 155% surge since its September 2023 IPO, driven by AI growth and smartphone integration.

Earlier this month, Arm also confirmed its central role in the $100 billion Stargate AI infrastructure project with OpenAI and Oracle.

Price Action: Arm’s shares rose 0.1% in after-hours trading, hitting $165. Earlier on Thursday, the stock closed at $164.83, marking a 6.06% gain, according to Benzinga Pro data.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.