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Exclusive: Arm expects its share of data center CPU market sales to rocket to 50% this year

Daniel Nenni

Daniel Nenni

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SAN FRANCISCO (Reuters) - Arm Holdings (ARM) expects its share of the global market for data center central processing units to surge to 50% by the end of the year, up from about 15% in 2024 with gains driven by the boom in artificial intelligence, a senior executive said.

Arm's CPUs are often used as a "host" chip inside of an AI computing system and act as a kind of traffic controller for other AI chips. Nvidia, for example, uses an Arm-based chip called Grace in some of its advanced AI systems which contain two of its Blackwell chips.

Arm's tech in many cases offers lower power consumption than rival processors made by Intel and Advanced Micro Devices, Mohamed Awad, Arm's infrastructure chief, told Reuters.

As AI data centers use huge amounts of electricity, Arm's chips have become increasingly popular among cloud computing companies.

Awad added that data center chips often use more of Arm's intellectual property and the company typically receives "a lot higher aggregate royalty rate" than chips for less complex devices.

UK-headquartered Arm, which is 90% owned by Japan's SoftBank Group, does not make chips itself but sells the fundamental building blocks and other intellectual property to cloud computing companies and firms like Apple and Nvidia to use to design chips for laptops, smartphones and data center processors.

Arm generates revenue by billing companies for a license to use its tech and collects royalty payments for each chip sold.

It struggled to make headway in the lucrative data center market for nearly two decades as switching over from the once-dominant x86 chips made by Intel and AMD means clients have to rewrite software as well as change up parts of hardware.

"We've gotten to the point where software is actually being developed for Arm first and foremost," said Awad.

Amazon.com has designed in-house data center CPUs with Arm tech that accounted for more than half of the capacity for chips it added over the last two years, Amazon said in December.

Alphabet's Google and Microsoft have also made Arm-based data center chips, though their efforts are more recent than Amazon's.

 
Daniel Nenni said:
SAN FRANCISCO (Reuters) - Arm Holdings (ARM) expects its share of the global market for data center central processing units to surge to 50% by the end of the year, up from about 15% in 2024 with gains driven by the boom in artificial intelligence, a senior executive said.

Arm's CPUs are often used as a "host" chip inside of an AI computing system and act as a kind of traffic controller for other AI chips. Nvidia, for example, uses an Arm-based chip called Grace in some of its advanced AI systems which contain two of its Blackwell chips.

Arm's tech in many cases offers lower power consumption than rival processors made by Intel and Advanced Micro Devices, Mohamed Awad, Arm's infrastructure chief, told Reuters.
Click to expand...
WOW

I had no idea that arm chips were in Nvidia Blackwell AI systems. 😲

Probably embedded in all sorts of devices.
 
fansink said:
WOW

I had no idea that arm chips were in Nvidia Blackwell AI systems. 😲

Probably embedded in all sorts of devices.
Click to expand...

Yes, Nvidia has an Arm architectural license like Apple, Qualcomm, MediaTek, and others. You will be hard pressed to find a chip without at least one Arm core. I am seeing many more RISC-V cores on design starts, which is encouraging, but Arm still dominates the embedded MPU market.
 
blueone said:
I don't buy it, especially considering Ampere revenues are so dismal. Yes, many or even most networking and storage controllers have Arm cores in them, but this claim is about data center CPUs.
Click to expand...

Last I looked AMD used Arm cores with their x86 products. Security is a big application for Arm cores. Intel is probably the only company that does not use Arm cores in the CPU products.
 
blueone said:
I don't buy it, especially considering Ampere revenues are so dismal. Yes, many or even most networking and storage controllers have Arm cores in them, but this claim is about data center CPUs.
Click to expand...
If you sell 100 units, then 150 units is a 50% increase ;).

I agree with your general intent though. I don't see ARM competing seriously in the DC in 2026. Even if they had a groundbreaking, blow everyone else out of the water, product release today, there likely wouldn't be much to shake a stick at by 2026.

I have been in several discussions on line about the ability of ARM to displace x86 in various markets based on the assumption of "basic design superiority". I consider this argument to be bunk. The basic architectural elements of ARM and x86 today seem largely identical to me. It is simply how each platform is targeted at which market features that differs IMO.
 
Daniel Nenni said:
Last I looked AMD used Arm cores with their x86 products. Security is a big application for Arm cores. Intel is probably the only company that does not use Arm cores in the CPU products.
Click to expand...
Embedded cores in a data center CPU is not the same as being the primary cores in a data center CPU. Not by a long shot, which is what the claim by Arm implied, and the claim I don't think is going to happen.
 
Just to clear, I do think x86 CPUs are missing out on the fastest growing market segment of data center CPUs, and that's in-house-designed custom CPUs for cloud data centers. They're all Arm-based for the primary cores. I know Intel has claimed to do custom SKUs for at least one cloud customer, but I very much doubt the volumes are comparable to AWS Graviton or Azure Cobalt.
 
blueone said:
Embedded cores in a data center CPU is not the same as being the primary cores in a data center CPU. Not by a long shot, which is what the claim by Arm implied, and the claim I don't think is going to happen.
Click to expand...

The move for cloud companies to make their own chips favors Arm. Amazon is public about it but others are chasing Amazon with similar intent. It was the same with Apple and now Tesla, competitors have no choice but to follow. I remember 10+ years ago when Arm announced they were going into the server market. It was a complete dud, it really was a laughing matter. Arm kept plugging away and it will probably be another five years but given the competitive pressures of cloud and the enormous amount of money that will be made with AI and datacenters it will happen, my opinion.
 
Daniel Nenni said:
The move for cloud companies to make their own chips favors Arm. Amazon is public about it but others are chasing Amazon with similar intent. It was the same with Apple and now Tesla, competitors have no choice but to follow.
Click to expand...
I agree. And Arm is winning in cloud computing company CPU design for good reasons. Arm IP for data center caliber cores (Arm v9 and v9-A) is the best and most complete there is for the cloud companies to easily design their own CPUs. No one else is close, and by the time RISC-V IP catches up, if it ever catches up, the competition will be over, IMO.
Daniel Nenni said:
I remember 10+ years ago when Arm announced they were going into the server market. It was a complete dud, it really was a laughing matter. Arm kept plugging away and it will probably be another five years but given the competitive pressures of cloud and the enormous amount of money that will be made with AI and datacenters it will happen, my opinion.
Click to expand...
All I'm complaining about is Arm's claim in the article that they will get 50% of data center CPU marketshare volume by the end of this year. I don't believe it. But I do suspect custom-designed Arm-based CPUs by the cloud computing companies is the fastest growing data center CPU market segment by volume.
 

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I assume HGX platforms mostly use Intel Xeon as head nodes. xAI mentioned they use Intel Xeon as head nodes.
 
blueone said:
All I'm complaining about is Arm's claim in the article that they will get 50% of data center CPU marketshare volume by the end of this year. I don't believe it. But I do suspect custom-designed Arm-based CPUs by the cloud computing companies is the fastest growing data center CPU market segment by volume.
Click to expand...
That 50% might be possible, especially if measured by number (volume) of cores. Arm piggybacks on Amazon, NVIDIA, etc. Every Graviton 4 has 96 Arm cores, every Grace Hopper super chip carries 72 Arm cores.
 
blueone said:
That’s really reaching… does your arm hurt?
Click to expand...
IDK - core CPU counts are very typical way of measuring volume. I would be interested in your SWAG at how many CPU cores Intel, AMD, NVIDIA, Amazon and Microsoft will deliver for data center in Q4 2025.
 
KevinK said:
IDK - core CPU counts are very typical way of measuring volume. I would be interested in your SWAG at how many CPU cores Intel, AMD, NVIDIA, Amazon and Microsoft will deliver for data center in Q4 2025.
Click to expand...
Well if it's come to that I am pretty sure Intel would lead the chart even in this situation they are as of rn
 
KevinK said:
IDK - core CPU counts are very typical way of measuring volume.
Click to expand...
Not to my knowledge, after decades in the data center industry. And it would be very confusing with different core types and state machine acceleration blocks in some CPUs.
KevinK said:
I would be interested in your SWAG at how many CPU cores Intel, AMD, NVIDIA, Amazon and Microsoft will deliver for data center in Q4 2025.
Click to expand...
I don't have any data to go on for Microsoft, Amazon, and Google. Intel and AMD CPU chip volume is published.
 
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