In the mid-1990s, a Finnish pulp-mill-turned-consumer-electronics-company agreed to let its main partner, Texas Instruments, combine its digital signal processor with technology from an obscure British company named Arm. The result of this novel collaboration was the iconic Nokia 6100 series of phones which went on to sell nearly 50 million units. In addition to being the first cell phones to include built-in video games like Snake and Logic, the Nokia 6110 was also the first mobile device to use the Arm architecture which would become the backbone of compute for decades to come.
Arm itself is a rather bland company with a unique business model. Sometimes referred to as “the Switzerland of the electronics industry,” Arm is a semiconductor company that doesn’t make semiconductors. Instead, the company designs processor architectures and licenses them. Its $4 billion in annual revenues come from royalties on every chip that is made which uses its designs or speaks to its instruction set.
Arm is everywhere. For almost thirty years, everything mobile—from the 6100 to the first iPhone to modern phones running on M4 and Snapdragon chips—has used Arm’s licenses. Nearly every modern car has a suite of Arm chips. Practically all 5G infrastructure relies on Arm in some way. The hyperscalers now run significant portions of their infrastructure on custom Arm server chips. Most laptops and tablets run on chips that rely on Arm licenses. Smart thermostats, industrial sensors, medical devices, point-of-sale terminals, smart meters, security cameras, and billions of other devices that most people don’t even think about as computers utilize Arm's microcontroller line. As the company itself puts it, “Arm powers the compute foundation of modern life, with more than 350 billion Arm-based chips shipped to date.”
Those staggering numbers are evidence of more than just a successful business. Arm has become an essential part of the compute ecosystem because it has remained neutral. As CEO Rene Haas told The Verge in 2022:
We really try to stay as neutral as possible. … We are involved in the ecosystem of ecosystems. If you start at the lowest level of the semiconductor chain — GlobalFoundries, Samsung, TSMC, Intel, all the people who build chips — you have to work with all of them. We have to make sure that our technology is going to be able to be built on every semiconductor process in the world, which requires investment across all of those partners.
Since the 1990s, Arm’s neutrality has been a fact of the market that most took for granted. The reality is that every company which builds on Arm's architecture, including Apple, Google, Amazon, Qualcomm, Samsung, and Nvidia, does so under a license that Arm can revoke. In October 2024, that reality became clear when Arm sent Qualcomm a termination notice, threatening to end the architectural license that Qualcomm has used for thirty years to design and ship chips. Qualcomm won that battle, but the war is far from over.
That first strike at Qualcomm demonstrated that the instruction set which runs modern civilization is not a public good. It is owned by a foreign company that is beholden to foreign shareholders. It is also a chokepoint in the tech stack that its owners have demonstrated a willingness to leverage against competitors. We’ve seen this problem before. The last time it was Intel and it took decades and billions in investment to route around. Policymakers in Washington have developed strategies for semiconductors, AI, submarine cables, spectrum, and more. What they haven’t developed yet, and increasingly need, is a strategy to secure the layer that sits between all of them.
The Invisible Layer
An instruction set architecture (ISA) is the translation layer between software and silicon. It is the list of fundamental operations a processor knows how to perform (e.g. add these two numbers, fetch this value from memory, jump to that application) and the precise way a program must phrase those requests. Everything above it is written assuming the processor underneath will understand those instructions. Everything below it exists to fulfill those instructions. The ISA is the connector between two halves of computing.
The reason it matters so much is the reason it stays invisible; the instructions are incredibly difficult to alter once implemented. A program compiled for one instruction set will not run on a processor that speaks a different one. Switching architectures means recompiling everything and, where source code is missing or the instruction syntax is different, it means starting over from scratch. For example, Apple has now done this migration three times, migrating from Motorola 68k to PowerPC to Intel x86 and finally to its own Arm-based chips. Each time it has migrated, it has had to develop and deploy an emulation layer to carry the old software across. For most of the industry, the instruction set is chosen once and then lived with for decades. The choice is less like picking a vendor than like pouring a foundation.
This structure exists well beyond mobile phones, though phones are where Arm won most decisively. Anything that runs software must be compiled against some ISA and therefore linked, quietly and durably, to whoever controls that architecture.
Arm’s Business Model
Arm owns no factories and (until a few months ago) makes no chips. What Arm sells is the design and the language, the blueprints for processor cores and licenses to the ISA those cores implement. A customer pays an upfront fee for access and then a small royalty on every chip it builds using Arm's technology while software developers are given free access to induce uptake.
This model was not the plan. Arm was founded in 1990 as a joint venture between Acorn Computers, Apple, and the chip firm VLSI Technology. Apple, which took a 43 percent stake in the company, wanted a low-power processor for a handheld device called the Newton. The Newton flopped and Arm pivoted. Co-founder Robin Saxby realized that licensing Arm’s designs to everyone and collecting a small cut whenever any of them succeeded had the potential to be far more lucrative, and he was right.
Here the analysis must digress because there are two kinds of Arm licenses and the difference between them runs underneath everything that follows.
The first is the standard technology license, sometimes called a TLA. Under it, a customer takes one of Arm's ready-made cores and drops it into its own chip. This is akin to buying a prefab house design: you purchase a license to the blueprints for a house that is already designed, build it on a plot of land you own, maybe change the paint color, and voilà you have a house without much hassle. This is the way that most of Arm's licenses work and is the low effort path since anyone can get a proven core and a quick route to market. In exchange you accept Arm's engineering choices and pay them a royalty.
The second is an architectural license (ALA) under which a licensee uses only the instruction set and designs its own cores from the ground up. If we continue with the home construction metaphor, an ALA is like being a licensed architect who designs a house however they like so long as it's built to the same building codes so that it connects to the same water, power, and sewer lines as every other house in the city. This is the hard, expensive path, and the club is small, composed of Apple, Qualcomm, Amazon, and a handful of others. Designing a high-performance core from scratch costs years and hundreds of engineers, but it is the only way to build something genuinely better than what every competitor is buying off the shelf. The fact that Mac laptops have outrun the performance of Intel on a fraction of the power comes from the fact that Apple licenses Arm's language and then builds cores nobody else has.
The instruction sets became a trap in the ordinary way that standards do. That compact 16-bit ISA in the old Nokia chip exists because customers building memory-constrained devices needed code that took up less space and Arm developed the architecture to give it to them. Each such extension made Arm chips fit more devices, and each new device added more software written using Arm, and the more software written using Arm made the next chip company's decision to use a different ISA a little more painful and expensive. Lock-in of this kind accrues, one reasonable accommodation at a time, until the accommodations are load-bearing.
The End of Neutrality
For most of its life Arm sold one thing above all: neutrality. Arm CEO Haas has consistently upheld that the company works with every chipmaker and every foundry, competes with none of its customers, and can therefore be trusted with the one decision a customer can never easily reverse. When the thing you are choosing is a foundation you will build a decade of products on, the supplier's neutrality is essential. A licensor that might someday become a competitor is a dangerous thing to depend on.
That promise has eroded over the past ten years. In 2016, the Japanese conglomerate SoftBank acquired Arm for roughly $32 billion dollars and took it private. SoftBank later tried to sell Arm to Nvidia for forty billion dollars but federal regulators stepped in. Because Arm is “the world’s most popular computing platform,” as Nvidia CEO Jensen Huang put it, the Federal Trade Commission concluded that a combined Nvidia-Arm would have “both the ability and incentive to use its control of Arm to diminish competition by undermining Nvidia’s rivals.”
Undeterred, SoftBank took the company public again in 2023, while retaining about 87 percent of the shares. As a near-total owner that paid a premium and watched a profitable exit collapse, SoftBank wants growth and Arm’s current business model is slow-and-steady. The faster way for SoftBank to make its money back is to capture more of the value in each chip, and the fastest way of all is to stop selling only the blueprint and start selling the chips.
So Arm did. Reuters reported in 2024 that the company had drawn up plans to raise prices by as much as 300 percent and had discussed designing its own chips to compete with its biggest customers. By early 2025 the Financial Times reported that Arm would ship a finished server CPU with Meta as a launch customer. And in March, Arm did something it hadn’t done in thirty-five years: it announced its own silicon. The chip, called the Arm AGI CPU and built with Meta on TSMC's most advanced process, is a complete data-center processor Arm plans to sell directly to hyperscalers. "We are now in a new business for Arm to supply chips," Haas said at the launch.
The Switzerland of the industry had entered the war it spent three decades promising to stay out of. Its first target in this new war was Qualcomm, a company with a long history of bad blood between itself and SoftBank.
This is the frame the Qualcomm lawsuit belongs inside. Treated as an isolated contract dispute, the case is a confusing tangle of license terms. Treated as a first strike against Arm’s smallest major competitor, it is much more clear. Qualcomm had acquired a startup called Nuvia in 2021 for $1.4 billion. Nuvia had been founded by veteran chip designers to build Arm-based cores for data centers, and it held its own architectural license. Qualcomm took Nuvia's work and turned it into the Oryon cores that now power its laptop and phone chips. Arm sued, arguing that Nuvia's license could not simply transfer to a new owner and that Qualcomm needed to stop using its instruction set and destroy the Oryon designs.
Notice what Nuvia designs chips for, what Qualcomm wants to focus more on, and what Arm’s new chip target is: data centers. The dispute Arm framed as a licensing technicality lines up perfectly with the market everyone is now stepping over each other to acquire a share of.
A neutral licensor does not want its customers to destroy lucrative chip designs. A competitor does.
After losing that first suit, Arm escalated. In October 2024 it served Qualcomm with a 60-day notice that it would cancel its ALA. The threat was extraordinarily audacious and amounted to a death sentence for one of America’s preeminent chip companies. Arm later withdrew the termination notice and lost in court. A Delaware jury cleared Qualcomm in December 2024, and in September 2025 a federal judge entered final judgment for Qualcomm on the last remaining claim and denied Arm a new trial.
Regardless of the outcome in court, the industry took notice that Arm was suddenly willing to do what would have been unthinkable a decade ago. The new reality for any company reliant on Arm licenses is that a 60-day notice can hit your inbox at any time and the only remedy is litigation so expensive that most licensees couldn't survive it.
One more fact belongs here, and it is the one Washington has not absorbed. Arm is a British company, owned by a Japanese conglomerate, listed on an American exchange, and sitting at the foundation of nearly all American computing. The United States has an industrial policy for chip fabrication that includes tens of billions of dollars aimed at manufacturing. It has no policy at all for whether and how the instruction sets those chips implement must be made available. As a matter of competition and even national security—the Department of War’s tech stack is totally reliant on tech companies and chips built on top of Arm’s ISA—the leading AI and chip companies need access to the most prominent instruction sets.
Everybody Builds Their Own
If you are one of the handful of companies large enough to hold an architectural license, the rational response to a licensor that has stopped being neutral is obvious: depend on it less and build your own. That is exactly what they are all doing.
Apple has the longest head start. Its M-series and A-series chips are cutting edge and it holds an ALA license that runs through 2040. Notably, Apple inked this deal just before Arm's IPO, locking in long-term access precisely because the change in Arm's ownership had made access feel less certain. Amazon, Google, Microsoft, and Nvidia also now design their own CPUs. Every one of those chips is built on the Arm ISA.
So the escape from reliance on Arm is only partial. Most major firms have escaped the engineering dependency and no longer need Arm to design their cores. They have not escaped the language dependency, and they cannot, because the real lock-in comes from the ISA. Tellingly, Amazon’s Graviton CPUs are not sold to anyone outside Amazon and even those fully in-house chips still run on Arm's instruction set. Amazon still pays Arm a royalty for each one it makes.
Who Should Own the Instruction Set?
When the landlord of the language merely collected rent and competed with no one, building your own house on that land was safe. When the landlord starts building houses of its own and suing tenants whose houses it covets, every tenant's investment looks suddenly more precarious.
All of which leaves one question: who should control the instruction set that nearly all the world's computing depends on? There are three possible answers and industry has not yet settled on which is the right one.
The first answer is the status quo where a single non-American company owns the layer. This company has no obligation to license it to anyone on fair terms and the industry makes do with whatever that company decides. The case for this situation is the case for any property right: Arm built the architecture, Arm maintains it, and the incentive to keep investing depends on Arm capturing the returns. The trouble is that we have run this experiment before with the other dominant ISA. Intel owned x86 for decades, declined to license it broadly, and the result was a long stagnation in which the architecture advanced at the pace a single unpressured incumbent felt like advancing it. The escape from that, when it finally came, came from Arm and it took nearly forty years and billions of dollars. As both Intel and Arm demonstrate, unconstrained architectural control has a tendency to calcify and, this time, it is being calcified under the control of an increasingly unpredictable actor.
The second answer is regulation. There is a well-developed model for exactly this problem in the world of telecommunications standards. When a patent is essential to an industry-wide standard that everyone must implement, its holder is typically required to license it on “fair, reasonable, and non-discriminatory terms,” otherwise known as FRAND. The whole point of FRAND is to stop the owner of something everyone is forced to use from weaponizing that position. The complication is that the obligation traditionally only applies to standard-essential patents and Arm's architecture is not a formal standard adopted by a standards body. It is private intellectual property, and so the existing FRAND system does not currently reach Arm. But the Qualcomm episode is precisely the argument for asking whether something like FRAND should apply to Arm’s instruction set, and some have already determined that the answer should be “yes.” Sens. Katie Britt and Adam Schiff recently introduced an amendment to the upcoming National Defense Authorization Act (NDAA) that would require all foreign-owned ISA providers to offer their instruction sets to US companies on FRAND terms. An ISA that nearly all of computing is required to implement is functionally an essential standard, regardless of what the paperwork says.
The third answer is the one gathering the most momentum: build an instruction set with no owner at all. RISC-V is an open, royalty-free architecture that emerged from a research project at UC Berkeley and is now governed by a nonprofit. There is no license to revoke, no royalty to raise, no company that can issue a 60-day notice. Anyone can build a RISC-V core, and the architecture cannot be bought, sued, or turned against the people who depend on it. The problem is that, currently, the cores and the software ecosystem around RISC-V are years behind any proprietary architecture.
China is building toward RISC-V as a matter of national survival, because an open architecture is one critical technology that cannot be embargoed. Europe has put 240 million euros into a program called “Digital Autonomy with RISC-V in Europe” to build sovereign supercomputing chips on the open architecture in order to reduce the continent's dependence on processors it does not control. Last year, both Meta and Qualcomm acquired companies with expertise in RISC-V-based AI inferencing chips while AMD, Google, Intel, Microsoft, and Nvidia are all active members and contributors to the organization developing the RISC-V standard. Each of these actors has realized that depending on an instruction set that someone else owns is a risk, and the only way to eliminate the risk entirely is for the layer to belong to no one. And yet, RISC-V is still far from a direct competitor to Arm and it will remain that way for at least the foreseeable future.
The Nokia 6110 divided the labor and the profits cleanly: Nokia made the phone, Texas Instruments made the radio, and Arm made the language. For thirty years that division held because the company that made the language had organized itself to be dependable. It is no longer organized that way. The instruction set was always the most permanent decision in computing, the one foundation that could not be re-poured. What the last few years have established is that the ground it sits on has an owner after all and that the people building on it have started, quietly and at enormous expense, to look for ground that does not.
