Arm Faces an Antitrust Investigation by the U.S. FTC: Conflict of Interest in Licensing and Its In-House Chip Business

According to a Reuters report citing Bloomberg on 5/15, British chip design company Arm Holdings is facing an antitrust investigation by the United States Federal Trade Commission (FTC). The core dispute is that Arm charges royalties to chip giants like Nvidia and Apple through its licensing framework, while also pushing development of its own branded chips. The FTC is assessing whether this constitutes “illegal monopolistic behavior in the semiconductor market.”

FTC investigation focus: refusing to license or lowering the quality of licenses

Bloomberg reports that the FTC is examining whether Arm would “refuse or reduce the quality of CPU design blueprint licensing,” while also accelerating development of its own chips. Earlier this year, the FTC notified Arm of this investigation and required it to preserve relevant documents. Arm did not comment on the investigation itself, but regarding client concerns raised by Arm’s first self-made AGI CPU and its projected $15 billion in single-product revenue by 2031, the company previously rejected antitrust allegations brought by licensed parties such as Qualcomm as “unfounded, desperate leverage tactics.”

Licensing business remains Arm’s main revenue source

Most of Arm’s revenue comes from licensing its semiconductor technology to companies like Nvidia and Apple and collecting design-use royalties. If Arm’s own branded chips compete in the market with existing licensed customers, it effectively means the licensees have to pay for the designs while also facing competition from the licensor in the downstream market—this is at the heart of the “conflict of interest” the FTC wants to clarify.

Multi-country simultaneous investigations; South Korea moves first in November

Arm’s licensing conduct has recently been scrutinized in multiple jurisdictions. In November last year, the Korea Fair Trade Commission entered Arm’s Seoul office to investigate and review its licensing practices. This time, the FTC’s action also signifies that the United States is joining the scrutiny of the reasonableness of Arm’s business model. The investigation outcome could have long-term impact on Arm and on the entire ARM architecture ecosystem—including multiple chip design firms that likewise rely on Arm licensing.

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