Arm Holdings, the UK-based semiconductor design firm, projects its data center CPU market share to leap from 15% to 50% by year-end, driven by soaring demand for artificial intelligence (AI) infrastructure. Mohamed Awad, Arm’s infrastructure chief, attributed the growth to the company’s energy-efficient technology, which is increasingly preferred over rival processors from Intel and AMD in power-hungry data centers.
Nvidia, Amazon Lead Adoption
Arm’s CPUs serve as critical 'host' chips in AI systems, coordinating workflows for accelerators like Nvidia’s Blackwell GPUs. Nvidia’s Grace CPU, built on Arm’s architecture, highlights the sector’s shift toward hybrid designs. Meanwhile, Amazon’s in-house Arm-based CPUs now account for over half its new data center capacity, with Google and Microsoft accelerating similar initiatives.
Software Shift Unlocks Growth
After two decades of challenges displacing x86 chips, Arm’s breakthrough comes as developers prioritize its architecture. 'Software is now built for Arm first,' noted Awad. Higher royalties from data center customers—who license more IP—have bolstered revenue for SoftBank-owned Arm, which earns fees from tech giants designing custom chips.
