Arm Holdings unveils “Physical AI” business unit to focus on robotics and automotive
Arm Holdings [1.] has strategically reorganized its corporate structure, establishing a new “Physical AI” business unit to significantly enhance its footprint in the burgeoning robotics and automotive markets. This decision was revealed by company executives at the ongoing Consumer Electronics Show (CES), an event where robotics emerged as a prominent theme. The creation of a dedicated robotics specialization unit coincides with a surge of activity and announcements at CES regarding humanoid robotics. The CES trade show in Las Vegas featured demonstrations from many different companies showcasing robots designed for applications ranging from automotive manufacturing to commercial cleaning and entertainment.
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Note 1. Arm Holdings plc is a foundational UK based intellectual property (IP) provider rather than a chip manufacturer. It licenses its underlying RISC architecture cores that powers the majority of the world’s smartphones, laptops, and data center chips. Its revenue model relies on licensing fees and royalties. Arm, originally known as Advanced RISC Machines, was founded in November 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology. The company is now owned mostly by Softbank and Softbank Vision Fund.
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The new Arm organizational framework now has three primary lines of business:
- Cloud and AI: Focused on data center and AI infrastructure solutions.
- Edge: Encompassing mobile devices, personal computing, and related technologies.
- Physical AI: Integrating its automotive business with robotics initiatives.
This consolidation leverages significant overlap in core requirements, such as shared sensor technologies and hardware needs between autonomous vehicles and robotics. This synergy is particularly relevant as automakers, including Tesla, are actively developing robotic solutions for automated warehouse and factory tasks. The expanded focus on Physical AI is integral to Arm’s broader growth strategy under CEO Rene Haas, who, over the past four years, has driven initiatives to optimize pricing models for advanced technology and explore internal full-chip design capabilities.
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Rene Haas, CEO of chip tech provider Arm Holdings, holds a replica of a chip with his company’s logo on it, during an event in Kuala Lumpur, Malaysia, March 5, 2025.
Photo credit: REUTERS/Hasnoor Hussain
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Key Reasons for the “Physical AI” Unit:
- Market Opportunity: Acknowledged the significant growth potential in robotics, from industrial automation to humanoid robots, driven by AI advancements.
- Synergy with Automotive: Combined robotics and automotive within the unit due to shared technical needs, such as power efficiency, safety, and sensor technology.
- Strategic Reorganization: Positioned Physical AI as a third core business line, alongside Cloud & AI and Edge (mobile/PC), to better focus resources and expertise.
- Customer Demand: Responding to existing customers (like automakers and robotics firms such as Boston Dynamics) who are integrating more AI into physical devices.
- Enhancing Real-World Impact: Aims to deliver solutions that fundamentally improve labor, productivity, and potentially GDP, moving AI from data centers to physical interactions
Executives view robotics as a market with substantial long-term growth potential. The head of the newly formed unit, Drew Henry, told Reuters that physical AI solutions could “fundamentally enhance labor, free up extra time” and may have a considerable impact on gross domestic product as a result. Henry said, “We work with everyone.” Arm-based chips are used by dozens of automakers around the world, and by robotics companies such as Boston Dynamics, which is owned by Hyundai.
The new Physical AI division plans to add staff dedicated to robotics, Arm Chief Marketing Officer Ami Badani said. The decision to combine automotive and robotics into a single unit was driven by shared stringent customer requirements concerning power constraints, safety standards, and reliability.
In summary, Arm is leveraging its expertise in energy-efficient chip design to power the next generation of intelligent, physical machines, moving beyond smartphones and into a broader world of autonomous systems and robotics.
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References:
2026 Consumer Electronics Show Preview: smartphones, AI in devices/appliances and advanced semiconductor chips
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The Internet of Things (IoT) explained along with ARM’s role in making it happen!
