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Arm Holdings faces potential slower growth in China, its second-largest revenue source, contributing 19% of total sales in fiscal 2025. Year-over-year revenue growth from China has only reached 7.5%, amid the country’s shift towards RISC-V architecture, which offers customization and cost advantages without licensing fees. This transition is part of China’s strategy to localize its semiconductor ecosystem and reduce reliance on Western technology.
Major Chinese tech firms like Alibaba Cloud, Huawei, Tencent, and ZTE have adopted RISC-V, with Alibaba leading in domestic chip production. The launch of RIVAI Technologies’ Lingyu server chip highlights China’s advancements in RISC-V technology. The Chinese government is also expected to support this shift, which may further weaken Arm’s position in the market.
NVIDIA and AMD are monitoring these developments closely. Both companies depend heavily on international designs, particularly in AI and data centers, sectors where RISC-V could disrupt their market presence. With Arm’s challenges, NVIDIA and AMD may need to reevaluate their strategies in China as the RISC-V adoption continues to accelerate.
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