Semiconductor designer Arm confirmed on Tuesday it would be launching its own chip, a significant departure from its traditional business model. For years, Cambridge-based Arm has focused on designing semiconductor architecture – the blueprint for how chips operate – and licensing those designs to tech firms.

A Shift in Strategy

Arm’s previous approach offered distinct advantages. By focusing on design rather than manufacturing, the company avoided the logistical complexities of sourcing raw materials, procuring manufacturing equipment, and managing global shipping. It allowed Arm to avoid direct competition with major chipmakers like Intel, Nvidia, Qualcomm, and Samsung, instead serving them as customers. This enabled Arm’s designs to be incorporated into a vast range of devices, from smartphones to household appliances.

The Financial Implications

Despite its widespread influence, Arm’s traditional licensing model has limitations. The commission earned on each chip built using its architecture represents a small fraction of the total sale price. In 2025, Arm designs were present in 31 billion chips, yet the company’s revenue was approximately £3 billion, equating to less than 10p per chip. Arm is a British semiconductor and software design company.

Addressing the RISC-V Challenge

A key driver behind this strategic shift is the growing popularity of RISC-V, a royalty-free alternative architecture. The rise of RISC-V poses a significant threat to Arm’s dominance, prompting the company to seek new avenues for revenue and market control.

The Road Ahead

Entering the chip market represents a substantial gamble for Arm. Although the company won’t be manufacturing the chips itself – likely outsourcing production to Taiwan – significant investment in research and development will be required. The current surge in demand for chips, particularly from artificial intelligence (AI) companies building data centers, presents a potentially opportune moment for Arm to capitalize on this growing market. Whether this move will prove successful remains to be seen.

The Changing Landscape of Securities Settlement

Beyond the semiconductor industry, financial markets are also undergoing significant changes. The upcoming transition to T+1 settlement – shortening the trade settlement cycle from two business days to one – is poised to reshape the financial plumbing that underpins global trading. The Financial Conduct Authority (FCA) has warned firms that it “may take action” against those who fail to comply with the new rules, emphasizing the importance of market integrity.