Arm Holdings, the UK-based chip design giant, is poised for a remarkable leap in the data center central processing unit (CPU) market, projecting its global share to skyrocket from approximately 15% in 2024 to an impressive 50% by the end of this year.
This bold prediction, announced by a senior executive on Monday, underscores the pivotal role of artificial intelligence (AI) in driving demand for Arm’s energy-efficient technology.
Mohamed Awad, Arm’s infrastructure chief, highlighted the company’s strategic advantage in an exclusive interview.
“The surge in AI workloads is transforming the data center landscape, and our CPUs are uniquely positioned to meet this demand,” Awad said.
Unlike traditional players like Intel and Advanced Micro Devices (AMD), Arm’s chips are increasingly favored for their lower power consumption—a critical factor as AI-driven data centers grapple with soaring electricity needs, as detailed in a 2024 International Energy Agency report.
Arm’s CPUs often serve as the “host” chip in AI computing systems, acting as a central coordinator for specialized AI processors.
A prime example is Nvidia’s Grace CPU Superchip, an Arm-based component integrated into its cutting-edge AI systems alongside two Blackwell chips.
This synergy has bolstered Arm’s reputation as a key enabler in the AI ecosystem, attracting major cloud computing players like Amazon, Google, and Microsoft, all of whom have developed Arm-based data center chips in recent years.
For instance, Amazon’s Graviton processors, built on Arm architecture, have powered significant capacity expansions since their debut.
The shift toward Arm’s architecture is already evident. Amazon has leveraged Arm technology to drive over half of its data center chip upgrades in the past two years, reflecting a broader industry trend toward efficiency and scalability, as noted in a 2023 AWS blog post.
Awad emphasized that data center chips, which rely heavily on Arm’s intellectual property, generate significantly higher royalty rates compared to simpler devices, further boosting the company’s revenue potential.
Arm’s meteoric rise comes after nearly two decades of challenges in penetrating the data center market, long dominated by Intel’s x86 architecture.
However, the AI revolution has flipped the script. With tech giants investing billions—Microsoft recently announced plans to spend $80 billion in fiscal 2025 on AI-enabled data centers—Arm’s low-power designs are proving to be a game-changer.
Industry analysts estimate that global data center power consumption could double by 2030, amplifying the appeal of Arm’s offerings, according to a McKinsey analysis.
Competitors are feeling the heat. Intel, which has struggled to maintain its foothold amid AMD’s gains, launched its next-generation Xeon processors in 2024 to claw back market share.
Meanwhile, AMD’s CEO Lisa Su recently forecasted a dip in data center sales for early 2025, despite long-term optimism for AI chip demand, as reported in a January 2025 earnings call. Arm’s projected tripling of market share could intensify this rivalry, potentially reshaping the semiconductor landscape.
Financially, Arm is well-positioned to capitalize on this growth. Majority-owned by Japan’s SoftBank Group, the company operates a licensing model, providing chip designs to industry leaders like Apple and Nvidia while collecting royalties on each unit sold.
This lean approach, combined with the AI-driven surge, has analysts buzzing. “If Arm hits 50%, it’s not just a win for them—it’s a seismic shift for the industry,” said tech analyst Sarah Lin of Summit Insights in a recent webinar.
Still, challenges loom. The rapid pace of AI innovation demands constant adaptation, and Arm must maintain its edge against rivals’ advancements.
Market skepticism also lingers, with some questioning whether the company can sustain such aggressive growth amid global economic uncertainties and potential supply chain constraints, as flagged in a 2025 Gartner semiconductor forecast.
For now, Arm’s trajectory appears upward. As data centers evolve to power the AI age, the company’s chips are becoming indispensable, promising a transformative year ahead. With the tech world watching closely, 2025 could mark Arm Holdings’ definitive arrival as a data center powerhouse.
