Arm is launching its own chip for the first time in its history, marking a major shift from its long-standing role as a CPU licensor. The new product, the Arm AGI CPU, is a data-center processor built for Artificial Intelligence data centers and agentic Artificial Intelligence infrastructure. Arm said the chip delivers double the performance of comparable x86 platforms, extending the company’s push beyond licensing and compute subsystem designs into selling Arm-designed silicon.
Meta Platforms will be the flagship launch customer and co-developer, and Arm has also signed up customers including Cloudflare, SAP, and OpenAI. The move comes as Arm’s data center business is growing quickly, with Artificial Intelligence data center royalty revenue more than doubling. Arm said the rise of agentic Artificial Intelligence is expected to drive more than four times the current CPU capacity per gigawatt (GW), increasing demand for efficient compute in the same power envelope.
Arm’s power-efficient CPU architecture has helped it dominate smartphones, where it holds more than 99% market share, and the company is now expanding in data centers as well. Arm brought in $4 billion in revenue in fiscal 2026. Despite that relatively smaller revenue base, the company has a market cap of around $140 billion, reflecting expectations that it can capture more value from its technology while continuing to benefit from its licensing and royalty model.
Investors responded positively, and Arm stock jumped 8% after hours on the announcement. The company expects the new chip unit to generate $15 billion annually within five years. Arm also expects total revenue to improve to $25 billion in five years and for earnings per share to reach $9 by then. The launch positions Arm to pursue a significantly larger share of the semiconductor value chain, with the AGI CPU serving as the first clear step in a broader silicon strategy.
