Arm launches its first chip, targeting $100B AI data centre market

Arm Holdings has unveiled its first-ever chip product — the AGI CPU — abandoning its decades-long model of licensing designs to other manufacturers.

Meta is the lead customer, with OpenAI, Cloudflare, SAP, Cerebras, and SK TelecomDealroom has a profile for this one. Try Dealroom → also signed up. Built by TSMC on its 3nm process, the chip has up to 136 cores and draws 300 watts. It will ship in volume in the second half of 2026.

The AI infrastructure boom has created enormous demand for power-efficient data centre processors, and Arm's licensing model limits how much of that spending it can capture. Direct chip sales unlock far higher revenue per unit; the most expensive data centre chips cost tens of thousands of dollars, versus tens of dollars for smartphone chips. Arm's annual revenue topped $4 billion for the first time in 2025, growing more than 20% a year — but the company sees a much bigger opportunity ahead.

The market figures bear that out. Creative Strategies forecasts data centre CPU demand will grow from $25 billion this year to roughly $100 billion by 2030, once AI-specific workloads are included. Even a small slice of that would represent a significant new revenue stream for Arm.

Arm's biggest risk is alienating its own customers. Licensees including Nvidia, QualcommDealroom has a profile for this one. Try Dealroom →, Amazon, and Microsoft have built businesses on Arm designs — and now face a new competitor in the same company they pay. Entering hardware will also compress margins; Arm currently posts a 98% gross margin, among the highest in the tech industry, a figure that cannot survive the move to manufacturing intact. Pierre FerraguDealroom has a profile for this one. Try Dealroom → of New Street ResearchDealroom has a profile for this one. Try Dealroom → called the shift "the most significant strategic pivot in the company's history."

The AGI CPU targets the orchestration layer — managing fleets of AI agents and coordinating workloads across data centres — rather than competing directly with Nvidia's GPUs. Arm claims its chip is twice as power-efficient as comparable x86 chips, a meaningful edge as energy costs increasingly constrain AI expansion. One estimate puts the potential savings at $10 billion when building a single large-scale AI data centre. CEO Rene HaasDealroom has a profile for this one. Try Dealroom → says the chip faces no export restrictions, leaving China as a future market.

Sources:
Arm
Wired
The Financial Times
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Arm

J.V.