Arm Under FTC Investigation as Chipmaker Moves into Developing AI Hardware

Arm Holdings is under investigation by the US Federal Trade Commission as regulators examine whether the British semiconductor company is using its dominant position in processor architecture to disadvantage competitors.

The inquiry focuses on Arm’s licensing business, which supports much of the global smartphone sector and increasingly the AI computing market, including high profile customers like NVIDIA, Amazon, and Qualcomm. The FTC is examining whether Arm could restrict access to key processor designs or offer less favorable licensing terms while simultaneously moving deeper into developing its own processors.

For decades, Arm avoided direct competition with customers by licensing designs rather than manufacturing processors itself. But in late March, Arm announced plans to build its own data center chip focused on AI workloads, a major change of strategy that immediately raised concerns among some partners who now view the company as both supplier and competitor.

“Whenever you both license technology IP and use it yourself to compete with your licensees, it raises a number of competitive questions,” said Jack Gold, principal analyst with J. Gold Associates. “Among them—did Arm learn things from the licensees that they are now using in their own products that compete with those companies?”

Qualcomm Dispute

The investigation follows pressure from Qualcomm, which has aggressively challenged Arm’s business practices across multiple jurisdictions. Qualcomm filed complaints with regulators in the US, Europe and South Korea, arguing that Arm’s licensing behavior threatens competition in semiconductors.

The dispute between the two companies reached a turning point after Qualcomm acquired chip startup Nuvia in 2021.

Arm later sued Qualcomm, claiming Nuvia’s Arm licenses could not automatically transfer after the acquisition. Qualcomm ultimately prevailed in court, allowing it to continue using Nuvia-derived processor technology in its Snapdragon chips. That legal battle fractured what had long been one of the semiconductor industry’s most important commercial relationships.

Arm has dismissed Qualcomm’s allegations, characterizing them as an attempt to gain leverage in an ongoing business conflict. The company has not publicly commented on the reported FTC investigation itself.

Regulators outside the US are already examining similar issues. South Korean authorities reportedly inspected Arm’s Seoul offices last year as part of an inquiry into licensing practices. European regulators have also received complaints tied to the company’s conduct.

Arm’s recent decision to build its own chips has major ramifications through the chip sector, because the industry is shifting from traditional x86 processors toward Arm-based designs that consume less power. Cloud providers including Amazon and Google are deploying Arm processors in data centers to reduce energy costs and improve AI performance efficiency.

Across the semiconductor industry, Arm’s influence in AI computing is expected to grow over the next several years. Some forecasts project that Arm-based processors could dominate custom AI server deployments before the end of the decade.

The company’s move into directly producing chips therefore changes the competitive equation. Customers that once viewed Arm as neutral infrastructure are now weighing whether the company could favor its own products over third-party licensees.

At stake, then, is not simply one licensing dispute but control over a foundational chip standard used across the tech industry.

In addition to the FTC, governments worldwide are paying closer attention to concentration in semiconductor markets. AI infrastructure has become a strategic national priority, and regulators view chip access as tied to both economic competitiveness and geopolitical influence.

Arm’s challenge will be convincing regulators that it can expand into chip production without undermining the open licensing model that made its architecture dominant in the first place.