Arm to launch first self-made processors, poaching employees from clients: Reports

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Arm reportedly to start competing with its own customers this year.

Arm
(Image credit: Arm)

Arm Holdings is set to launch its first in-house designed processor later this year and has already landed orders from several customers, including Meta, according to the Financial Times. This decision places Arm in direct competition with some of its customers that develop Arm-based processors for data centers, including Ampere and, to some degree, Nvidia, marking a major shift in the company's strategy. In addition, Arm is actively poaching talent from its rivals, according to Reuters.

Arm goes hardware

According to the Financial Times, the CPU will be a general design aimed at data centers. It will be built 'on a base' that allows for some customizations for the end user, such as Meta. FT didn't reveal the actual CPU specs or elaborate on the customizations, so we can only wonder how many cores, memory channels, PCIe lanes, and other I/O the processor will support. 

Nonetheless, we can speculate that Arm's in-house processor will be based on the company's Neoverse V3 (high-performance) or Neoverse N3 (energy-efficient) general-purpose cores based on the Armv9.2 microarchitecture. It is also likely that the CPU design will leverage Arm's Neoverse compute sub-system (CSS) IP for data center processors. Arm's Neoverse V3 CSS enables building processors with up to 64 V3 cores per die, while the Neoverse N3 CSS allows the building of CPUs with up to 8 N3 cores per die. Of course, multiple CPU chiplets can be used within a processor, so the final core count of Arm's offering remains to be seen. 

It remains unclear what level of customizability Arm will offer its clients. However, assuming it is substantial enough, Arm's in-house CPUs will differ from typical off-the-shelf offerings from AMD or Intel. 

Arm's own data center-grade CPU will, without any doubt, compete against processors designed by its customers. However, that competition may not be dramatic as most of Arm's data center licensees use their custom-designed processors exclusively in their own data centers (AWS, Google, Microsoft) or target them at very specific workloads or platforms (Nvidia). 

While this shift will undoubtedly upset companies like Ampere or Huawei, it is unlikely that this will cause many difficulties as Ampere appears to be in the process of being taken over by Softbank, whereas Huawei is mostly concentrated on making chips for itself and close partners. 

Nonetheless, it will be interesting to see whether there will be many companies willing to license Arm's core designs or CSS designs for data center-grade processors going forward now that Arm offers its own CPUs. 

Keep in mind that Arm or Meta did not comment to FT on the matter.

And poaches talent from its customers

In addition to making its own hardware, Arm is also actively recruiting talent from its own customers, which will further irritate its clients. Reuters reports that Arm has been hiring executives from its licensees since November 2023 to support its transition into chip sales. Recruiters working for Arm have contacted Silicon Valley chip designers, seeking expertise to strengthen its chip division. 

This hiring activity contradicts CEO Rene Haas's testimony in December in the company's trial against Qualcomm, where he denied that Arm was building its own CPUs, despite internal recruitment efforts already being underway. Given the fact that Arm has been actively hiring experienced chip developers and chip sales personnel for well over a year, this suggests that its own hardware is expected to become a major source of revenue, and the company hopes to compete with giants like AMD and Intel.

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Anton Shilov
Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

16 Comments Comment from the forums
  • bit_user
    The article said:
    This decision places Arm in direct competition with some of its customers that develop Arm-based processors for data centers, including Ampere and, to some degree, Nvidia
    Ampere already switched to using its own cores, last year. And Nvidia's Grace is quite specialized for integrating into a NVLink fabric with Hopper and Blackwell nodes.

    Ampere might be a bit threatened by this move, just because they had recently been the only independent ARM server CPU maker, but it's probably not even on Nvidia's radar screen.

    The article said:
    the Neoverse N3 CSS allows the building of CPUs with up to 8 N3 cores per die.
    Not according to this:
    "the N3 CSS design supports a range of CPU cores, from 8 up to 32"

    Source: https://www.anandtech.com/show/21270/arm-announces-neoverse-v3-and-n3-cpu-cores
    The article said:
    the final core count of Arm's offering remains to be seen.
    The above article claims up to 128 V3 cores can be included per package, if spread across at least two dies.

    Arm also has Neoverse E3 cores, which seem aimed more towards embedded servers.

    The article said:
    This hiring activity contradicts CEO Rene Haas's testimony in December in the company's trial against Qualcomm, where he denied that Arm was building its own CPUs
    Their previous announcement of silicon design sounded like they were focused just on CPU chiplets. So, that statement could've been true in the most literal sense that their customers would be others making their own CPUs (probably already IP customers of ARM's), and not systems companies that would be interested in buying only full CPUs.
    Reply
  • pug_s
    I think this is a slippery slope that ARM is doing. by competing against its customers. I can't wait until RISC V matures to a point where we see them in phones and laptops.
    Reply
  • bit_user
    pug_s said:
    I think this is a slippery slope that ARM is doing. by competing against its customers. I can't wait until RISC V matures to a point where we see them in phones and laptops.
    If ARM establishes itself as a CPU maker, then they are no longer tied to the AArch64 ISA. That means they can pivot to making RISC-V CPUs like everyone else, when the time is right.

    I think that's one reason they're making this move, but it's also to offset the huge hit they took on revenue from Qualcomm switching to its own core designs, instead of licensing them from ARM.

    Besides, as long as this is limited to server CPUs, they're not really competing against anyone licensing their cores. It's mainly just architecture licensees, from whom Arm is making very little money anyway.
    Reply
  • Mindstab Thrull
    Just want to say that this isn't the first tech company to compete against their customers. NVIDIA already does this, as do some PSU manufacturers. Also doesn't Foxconn do this as well, or at least did at one point? So if they find a good reason to do so, and are using their own designs and whatnot, why not?

    Mindstab Thrull
    Reply
  • bit_user
    Mindstab Thrull said:
    Just want to say that this isn't the first tech company to compete against their customers. NVIDIA already does this, as do some PSU manufacturers. Also doesn't Foxconn do this as well, or at least did at one point? So if they find a good reason to do so, and are using their own designs and whatnot, why not?
    Perhaps the grand daddy of all examples: Microsoft! Back in their heyday, they would look at which applications were popular and successful, then write their own version. That's where most of the software in MS Office came from.
    Reply
  • stuff and nonesense
    Arm choosing to make their own cores is a huge change to their established business model. A gamekeeper turning poacher.

    If it is accurate that they are poaching their client’s customers then it is somewhat immoral.

    If their clients have full access to the features, architecture (everything ARM is selling to the users) and has had time to generate a competitive solution - a level playing field then all is fair.
    If ARM is abusing a position of privilege that’s their business. Their clients will decide whether they want to keep supporting them.
    Reply
  • bit_user
    stuff and nonesense said:
    Arm choosing to make their own cores is a huge change to their established business model.
    They already sell their own core designs. So, it just seemed like the next logical step to get them manufactured into chiplets and save customers the trouble of managing layout and manufacturing of that part of their processors, instead just concentrating on their unique value-add. That was rumored sometime last year. Going from chiplets to entire CPUs is the next logical step. The only significant competitive threat I see is to their architectural licensees, but this part isn't really new.

    A contrasting view would be that for Microsoft, Amazon, Google, and others all to take ARM IP and individually go through the motions of integrating it and getting it manufactured is a duplication of labor. If ARM subsumes that function as well, then it should drive efficiencies.
    Reply
  • stuff and nonesense
    bit_user said:
    They already sell their own core designs
    License to clients, e.g. Qualcomm.
    bit_user said:
    trouble of managing layout and manufacturing of that part of their processors
    Licence available to clients
    bit_user said:
    Going from chiplets to entire CPUs is the next logical step.
    ok, but selling to ultimate customer potentially breaks the business models of their clients.
    bit_user said:
    A contrasting view would be that for Microsoft, Amazon, Google, and others all to take ARM IP and individually go through the motions of integrating it and getting it manufactured is a duplication of labor. If ARM subsumes that function as well, then it should drive efficiencies.
    ARM, if they subsumed the whole design and manufacturing procedure would revolutionise the ARM marketplace.
    The duplication of labour is between competitors. Differing requirements based around the common core foster advances in design and improve the product. Competition advances the art. Though not a perfect example look at Apple v Qualcomm et al.
    Reply
  • bit_user
    stuff and nonesense said:
    License to clients, e.g. Qualcomm.
    Qualcomm? Not any more!
    ; )
    The loss of IP licensing revenue from Qualcomm is one of the reasons Arm is having to do this.

    stuff and nonesense said:
    ok, but selling to ultimate customer potentially breaks the business models of their clients.
    The thing is, the article seems to focus on server CPUs. The only ones who currently license ARM core designs and sell server CPUs to a 3rd party (i.e. as opposed to just using them internally, like Microsoft, Amazon, and Google all do), is Nvidia and Huawei. Nvidia's Grace is heavily customized for use within their GPU servers, and there's no way ARM is selling drop-in replacements because NVLink is proprietary. And Huawei is selling to Chinese customers who probably need or want to source from a Chinese brand, no matter what else might be on the market. Not to mention that I think Huawei is using their own cores, like Ampere has been doing since last year. So, I really don't see a single instance where someone who's currently licensing ARM cores would be directly threatened by this move, providing that it's contained only to the server market.

    If ARM wanted to branch into selling their own mobile or laptop SoCs, that would be a different story, as it would put them in competition with MediaTek, Rockchip, Samsung, etc. However, ARM doens't have all the necessary IP needed for that. One glaring omission from their IP portfolio is a 5G modem, which (as Apple seems to have demonstrated by counterexample) is quite a non-trivial undertaking.

    stuff and nonesense said:
    The duplication of labour is between competitors.
    Yeah, but with scale comes efficiency. Arm can do it cheaper and possibly by enough that their customers would end up no worse off.

    stuff and nonesense said:
    Differing requirements based around the common core foster advances in design and improve the product.
    Arm has always allowed customers to order up their IP with customized parameters. Intel and AMD make custom Xeon and Epyc models that are made to order, for their biggest customers. There's no reason to think Arm won't continue this practice.

    stuff and nonesense said:
    Competition advances the art.
    Sure, but I don't really see anything in MS, Amazon, and Google's server CPUs that's such a special sauce. Not like what Nvidia is doing, at least. And if they want to incorporate some custom IP in the CPUs ARM would make for them, I'm sure Arm will oblige. Minimum order 10M.

    stuff and nonesense said:
    Though not a perfect example look at Apple v Qualcomm et al.
    It's not an example, at all. Both design their own cores. Amazon, Microsoft, and Google don't. They just pick parts out of Arm's existing IP catalog.
    Reply
  • pug_s
    bit_user said:
    Perhaps the grand daddy of all examples: Microsoft! Back in their heyday, they would look at which applications were popular and successful, then write their own version. That's where most of the software in MS Office came from.
    I think a better example is what Microsoft is doing with making surface laptops/tablets and Intel is making with Intel Nucs. Both companies want to make appealing PC/laptop form factors so that other manufacturers would copy them and it works. Very much different thant what is ARM is doing.
    stuff and nonesense said:
    Arm choosing to make their own cores is a huge change to their established business model. A gamekeeper turning poacher.

    If it is accurate that they are poaching their client’s customers then it is somewhat immoral.

    If their clients have full access to the features, architecture (everything ARM is selling to the users) and has had time to generate a competitive solution - a level playing field then all is fair.
    If ARM is abusing a position of privilege that’s their business. Their clients will decide whether they want to keep supporting them.
    Arm is suing Qualcomm over licensing money over Nuvia and now wants to compensate by making its own CPU's is really stupid and nothing more than a cash grab. ARM should instead focus more attention on how to make ARM Server CPU's mainstream by providing more support in reference designs so more companies would make ARM cpu's and get more license fees.
    Reply