Arm Faces FTC Probe as Seoul and Brussels Pursue Same Case

The US Federal Trade Commission (FTC, the agency that polices anticompetitive behavior in American markets) has opened a formal antitrust probe into Arm Holdings over how the British chip-design firm licenses the architectures that sit inside almost every smartphone and a growing share of data center servers. The company confirmed earlier this year that it received a document-preservation request, and the investigation was first reported on May 15, sending Arm shares down as much as 8 percent intraday before the stock recovered to close near $208.

Cambridge, England has stopped being a pure blueprint shop. On March 24, Arm shipped a 136-core data center processor co-developed with Meta, the first production silicon in the firm’s 35-year history. That product, and the way it changes Arm’s relationship with the customers who pay its royalties, sits at the heart of three antitrust inquiries now running on three continents.

The FTC’s Question, in One Sentence

The Commission is asking whether Arm intends to refuse or degrade the central processing unit (CPU, the main calculation engine inside a chip) blueprints it licenses to Apple, NVIDIA, Qualcomm, MediaTek and roughly every other large fabless chip company, at the same moment Arm has begun selling its own competing silicon into the same accounts. The probe is at the information-gathering stage. Arm confirmed in a filing that it had been told to preserve documents and said it intends to cooperate.

Investors did not wait for the procedure to play out. ARM dropped to roughly $190 in extended trading on May 15 before institutional buyers stepped back in, leaving the close at $207.96, a slim daily loss against a stock that had nearly doubled this year and outpaced the Philadelphia Semiconductor Index. The pullback wiped close to $7 billion of paper value before most of it recovered, and the move underlined how much of the current valuation rides on regulators leaving the licensing model intact.

Three Continents, One Complaint

Look behind each of the three probes and you find the same plaintiff. Qualcomm filed parallel antitrust complaints with the FTC, the European Commission, and South Korea’s Korea Fair Trade Commission (KFTC, the country’s antitrust regulator) in March 2025, weeks after a Delaware jury sided with Qualcomm in a separate licensing fight.

A simultaneous filing across three jurisdictions is a chosen escalation. It forces parallel discovery, makes settlement harder to broker, and pushes the dispute from contract court into competition law, where injunctive remedies can include compulsory licensing. Each regulator picked up a different slice of the same question: Brussels on single-market access, Seoul on the contested Nuvia rights, Washington on the broader squeeze.

Why Cambridge Stopped Being Just a Licensor

For three and a half decades, Arm sold one product line: instruction-set architectures and CPU cores that other companies stitched into silicon and paid royalties on. Rene Haas, Arm’s chief executive officer, has been pushing the company up that value chain since the SoftBank-engineered initial public offering of September 2023.

The AGI CPU and the Meta Hand

The clearest break with the old model arrived in March of this year. Arm unveiled the AGI CPU, a 136-core processor built on TSMC’s 3-nanometer node and packed with Neoverse V3 cores running at up to 3.7 GHz boost across two dies, all within a 300-watt envelope. Meta is the lead customer and co-developer, with Santosh Janardhan, Meta’s head of infrastructure, publicly committing to a multi-generation roadmap.

Arm has also disclosed commercial commitments from Cerebras, Cloudflare, F5, OpenAI, Positron, Rebellions, SAP and SK Telecom. The chip is sold as finished silicon, not as a design file. That is the line the new business has crossed.

Compute Subsystems Double the Royalty

The shift began earlier with the Compute Subsystems product framing. CSS bundles CPU cores, memory controllers, and interconnect into a verified package rather than selling cores piecemeal. Arm’s own disclosures put CSS royalty rates at roughly double those of legacy core licenses.

By the November 2025 quarter, the company had signed 19 CSS licenses across 11 customers, with five designs already shipping inside products from NVIDIA, Google, and Microsoft.

From Cortex to C1

A naming change makes the strategy concrete. Arm is retiring the Cortex brand, in use since 2004, in favor of C1-Ultra, C1-Premium, C1-Pro and C1-Nano tiers. The new lineup comes pre-integrated for original equipment manufacturers. It also comes with the price tag of a finished platform rather than a piece of intellectual property, which is the lever regulators are watching most closely.

The Qualcomm Tripwire That Set Everything Off

The road to the Seoul raid runs through a Delaware courtroom. In December 2024, a jury found that Qualcomm did not breach Arm’s licensing agreement when it acquired the chip startup Nuvia for $1.4 billion and used its Oryon cores inside Snapdragon X laptop processors. A September 2025 post-trial ruling extinguished Arm’s last remaining claim.

After two years of litigation, Arm has lost. Every claim it asserted against Qualcomm and Nuvia has been rejected by the court.

That wording is from Qualcomm’s October 1, 2025 statement on the post-trial judgment. The phrasing matters: it converted what Arm framed as a contract dispute into the foundation for a multijurisdictional antitrust attack. Qualcomm’s regulatory complaints argue that Arm shifted from an open licensing model into a restrictive one, choosing which customers receive full access and which get a degraded tier as the licensor moves closer to selling rival products. Arm’s public position is that its terms are non-discriminatory and that finished silicon is additive to the licensing book, not exclusive of it.

What the Licensees Stand to Lose

If any of the three regulators finds Arm has been narrowing access, the immediate beneficiaries are the licensees that have been quietly stockpiling alternatives. Each carries a different exposure.

• Most insulated: Apple holds a perpetual architecture license dating to the 1990s. The probe still matters because Apple Silicon’s roadmap depends on Arm’s instruction-set extensions for matrix math, and the company has been hedging foundry exposure through a preliminary chip-manufacturing deal with Intel.
• The would-be acquirer: NVIDIA pays royalties on the Grace and Grace Blackwell server CPUs and tried to buy Arm outright for $40 billion in 2020 before regulators killed the deal. It now sits across the table from a licensor it once expected to own, while running its own $40 billion AI equity program in parallel.
• The plaintiff: Qualcomm has shifted Snapdragon X laptop chips onto Nuvia-derived Oryon cores. A favorable antitrust outcome would lock in that path and open compulsory-licensing remedies if any regulator wants them.
• Quiet hedger: MediaTek licenses Arm cores for smartphone platforms and has been evaluating RISC-V, the open instruction set, as an insurance line.
• Direct competitors now: Google, Microsoft, and Amazon all license Compute Subsystems and now face Arm’s own silicon bidding against them for Meta-style hyperscaler workloads.

The dependency runs deep. By Arm’s own count, the architectures power more than 50 percent of CPU compute shipped to hyperscalers in fiscal 2026. A regulator that finds the licensor abusing that base of power has substantial remedy options on the shelf.

The Royalty Engine Under the Probe

Arm’s fiscal year ended March 31, and the company reported record numbers on May 7. The shape of those numbers, disclosed in Arm’s fourth-quarter fiscal 2026 earnings release, explains why a probe focused on licensing behavior rattled investors so quickly.

• $4.92 billion in full-year revenue, the third straight year of growth above 20 percent since the 2023 listing.
• $2.61 billion in royalty revenue for the year, up 21 percent, with data center royalties more than doubling.
• $2 billion of AGI CPU customer demand booked across fiscal 2027 and 2028, per the AGI CPU launch disclosure, before the chip ships at volume.

The structure of those numbers tells the regulatory story. Royalty income, the older revenue line, grew slower than licensing. The licensing line is where CSS and the new pre-integrated platforms sit, and where price discipline can be exercised by tier. The new silicon business sits outside both lines: it is hardware revenue Arm did not collect before, sold into accounts that also pay fees on competing designs. That overlap is what the three regulators are now mapping.

If the FTC settles for a consent decree that constrains how Arm prices its Compute Subsystem tiers, Cambridge can absorb the friction and keep growing into the framework Haas has built. If any of the three authorities finds the new silicon business requires structural separation from the licensing book, the value-chain climb that took three years to engineer gets unwound on a regulator’s schedule.