Arm Holdings designs the processor architecture that most of the world's computing runs on, and until 2026 it never sold a chip. The company was founded in November 1990 as Advanced RISC Machines, a joint venture between the British computer maker Acorn Computers, Apple Computer and the chipmaker VLSI Technology. Acorn contributed 12 engineers and the RISC processor design its team had built for the Acorn Archimedes, Apple invested $3 million because it needed a processor that would not flatten the batteries of its Newton handheld, and VLSI supplied the design tools. Robin Saxby arrived as chief executive in 1991 and set the company up in a converted barn at Swaffham Bulbeck, outside Cambridge.
The licensing model
Saxby's decision was to sell designs rather than chips, which had no precedent in the semiconductor industry of 1990. Arm licenses processor designs and instruction sets to chipmakers for an upfront fee, then collects a royalty on substantially every chip those partners ship. Royalty rates are set per unit and generally step down as volumes rise, subject to an agreed minimum per chip, so Arm makes its money on breadth rather than on any single customer. In the year to March 31, 2026 that produced $2,307 million of license and other revenue and $2,613 million of royalties, $4,920 million in total, against cost of sales of $121 million.
Customers pick how much of the portfolio they want. Arm Total Access bundles the current products for a fixed annual fee. Arm Flexible Access gives cheaper access to older designs with a licence fee due only when a design goes to tape-out, which suits startups. Architecture licences let a company such as Apple or Qualcomm design its own core that implements the Arm instruction set. Since 2024 Arm has also sold Compute Subsystems, pre-integrated and verified blocks of cores, interconnect and system IP, which raise the amount of content Arm supplies per design.
How mobile made Arm the default
Arm's first commercial deployment, the ARM610 in Apple's Newton MessagePad in 1993, sold poorly, but 1993 was Arm's first profitable year and the architecture had proved itself in a battery-powered device. Licensing to Texas Instruments from 1993 produced the Thumb compressed instruction set and the ARM7TDMI core, which TI supplied to Nokia for handsets such as the 6110 in 1997. Arm floated in April 1998, trading in London and on Nasdaq the same day at 575p a share, and changed its name to ARM Holdings.
The iPhone in 2007 used a Samsung-built application processor with an ARM11 core, and the smartphone market that followed made the architecture unavoidable: a phone needs high performance from a small battery with no fan, which is what a RISC design optimised for power efficiency delivers. Arm reports that it has held more than 99% of the mobile application processor market for years, because the major mobile operating systems are built for it. Mobile still supplied about 43% of royalty revenue in fiscal 2026.
SoftBank, the blocked Nvidia deal and the Nasdaq listing
SoftBank Group agreed to buy Arm in July 2016 for 24.3 billion pounds, about $31.4 billion, and completed the deal that September, delisting it from London and Nasdaq. In September 2020 SoftBank agreed to sell Arm to Nvidia for about $40 billion. The proposal alarmed the rest of the industry, because Nvidia's competitors license the same architecture, and it drew opposition from the U.S. Federal Trade Commission, the UK Competition and Markets Authority and the European Commission. The deal was abandoned in February 2022, the month Rene Haas became chief executive, and SoftBank went back to the public markets: Arm listed on Nasdaq on September 14, 2023 at $51 per American depositary share, raising about $4.87 billion at a valuation of roughly $54.5 billion. SoftBank still held about 86.4% of the shares as of May 21, 2026.
The data center push
Arm's growth now comes from chips that sell for far more than smartphone processors. Its Neoverse line is the basis of Amazon's Graviton, Google's Axion, Microsoft's Cobalt and Nvidia's Grace processors, and Arm says data center royalties more than doubled year over year in fiscal 2026 and that its designs now account for roughly 50% of CPU compute at the largest hyperscalers. Google is replacing x86 host processors with Axion alongside its next-generation TPUs; Microsoft runs Cobalt across a substantial part of Azure for customers including Databricks, Siemens and Snowflake.
On March 24, 2026 Arm crossed the line it had respected for 35 years. At its Arm Everywhere event in San Francisco it launched the Arm AGI CPU, a data center processor it designs and sells as finished silicon: up to 136 Neoverse V3 cores, 12 DDR5 memory channels and PCIe Gen6 in a 300W envelope, aimed at agentic AI workloads. Meta is lead partner and co-developer, Arm reported more than $2 billion of customer demand across fiscal 2027 and 2028, and systems are available from ASRock, Lenovo, Quanta and Supermicro. Arm says more than 50 companies backed the move, including AWS, Broadcom, Google Cloud, Marvell, Microsoft, Nvidia, Samsung and TSMC, but it also means Arm now competes in a market its own licensees sell into.
What the fiscal 2026 numbers show
Revenue of $4,920 million was up 23%, a third consecutive year of growth above 20% since the IPO. Gross profit was $4,799 million, a margin above 97%, but research and development of $2,776 million, about 56% of revenue, and share-based compensation held operating income to $900 million and net income to $904 million. Arm ended the year with $2,751 million of cash and cash equivalents plus $850 million of short-term investments, remaining performance obligations of $2,071 million and 9,584 employees, 84% of them in engineering roles across 19 countries. Cumulative shipments of Arm-based chips passed 350 billion, and Arm counts more than 22 million developers writing for the architecture.
The open risks
Three things constrain the story. Revenue is concentrated: the top five customers, which include Arm China and SoftBank Group, were about 57% of fiscal 2026 revenue, and Arm China alone was about 16% while operating entirely outside Arm's control, since Arm transferred its equity in the venture to a SoftBank subsidiary in March 2022. Litigation with Qualcomm over whether Nuvia's architecture licence transferred when Qualcomm bought the startup has run since August 2022; a December 2024 jury did not reach a complete verdict, the court ruled for Qualcomm in September 2025, Arm has appealed to the Third Circuit, and a separate Qualcomm claim is expected to reach trial late in calendar 2026. And RISC-V, the royalty-free open instruction set, keeps gaining ground in microcontrollers and embedded designs, with GlobalFoundries buying the RISC-V processor IP company MIPS in August 2025. None of those threatens Arm's mobile position in the near term; all of them shape how much of the AI build-out it can convert into royalties.
