Arm Faces US Antitrust Probe Over Chip Dominance After 90% Market Share

United States federal regulators have launched an antitrust investigation into Arm Holdings, scrutinizing whether the chip designer is illegally using its near-monopoly in smartphone processors to stifle competition as it enters the market for server chips. The U.S. Federal Trade Commission (FTC) is examining if Arm is unfairly restricting rivals' access to its core architecture, a move that follows the company's recent launch of its own data center CPU and could impact the 90 percent-plus market share it holds in custom AI processors by 2029.

"The move comes as Arm launched its own AGI CPU focused on data centers... a significant departure from the company, whose business previously focused on licensing its chip designs to other companies," Bloomberg reported, citing people familiar with the matter.

The probe requires Arm to preserve internal documents related to its licensing practices and expansion strategy. The investigation’s flashpoint is Arm’s shift from a pure intellectual-property (IP) licensor—acting as a "Switzerland" for the chip industry—to a vertically integrated chipmaker. This pivot was highlighted by its March introduction of a new CPU for AI data centers, placing it in direct competition with major customers like Nvidia and AMD, who license its architecture to build their own server products.

The investigation injects significant uncertainty into Arm's business model, which has powered its stock since its IPO. The core risk for investors is whether regulators could force changes to Arm's licensing terms or even seek to separate its IP business from its new chip design unit. The probe was reportedly triggered by complaints from Arm's own customers, who are now also its competitors and fear Arm could give its internal teams preferential access to its best designs, leaving licensees with lower-quality alternatives.

Qualcomm Lawsuit Foreshadowed Regulatory Scrutiny

Arm’s regulatory troubles did not begin in a vacuum. The company’s long-standing relationship with Qualcomm, the world's largest smartphone chipmaker, fractured publicly when Arm sued it in 2022. Arm argued that Qualcomm's acquisition of chip startup Nuvia did not transfer Nuvia's architectural licenses, a case Arm ultimately lost. Following the legal battle, Qualcomm initiated a global antitrust campaign, engaging with regulators in the U.S., Europe, and Korea. This campaign alleged that Arm was abusing its dominant market position, culminating in a raid on Arm’s Seoul office by Korea’s Fair Trade Commission in recent years.

From Mobile Dominance to AI Ambition

Arm's architecture is the undisputed standard in the mobile computing market, used by Apple, Samsung, MediaTek, and Qualcomm in virtually all smartphones. While the x86 architecture from Intel and AMD still leads in traditional desktops, Arm-based chips like Apple's Silicon and Qualcomm's Snapdragon X-series are rapidly gaining ground. However, the most significant battleground is the AI data center. Analysts project that by 2029, over 90% of custom AI accelerators will be built using Arm technology. By launching its own server processor, Arm is making a direct play for this lucrative market, a move that has its biggest partners—and now regulators—on high alert. The central question for the FTC is whether a company can fairly act as both a foundational supplier and a direct competitor in the same industry.

This article is for informational purposes only and does not constitute investment advice.