Arm starts new Physical AI unit to grow robotics business

Arm Restructures Around Physical AI

Chip design company Arm Holdings has launched a new Physical AI division as part of a broad reorganization aimed at capturing growth in robotics and automotive technology. The move reflects a wider industry shift toward artificial intelligence systems that act in the physical world, from factory robots to intelligent vehicles.

Three Core Business Lines

Under the new structure, Arm will operate three main lines of business:

• Cloud and AI – focused on data center and large-scale AI workloads
• Edge – covering mobile devices, PCs and other edge-computing products
• Physical AI – bringing together Arm’s automotive and robotics activities

The Physical AI unit is designed to concentrate Arm’s efforts on chips and architectures that power machines interacting directly with the real world, whether on the road or on the factory floor.

Why Combine Automotive and Robotics

Arm executives say automotive and robotics customers face similar technical demands, which made it natural to group them in a single division. Both sectors require:

• Stringent power efficiency to enable long operating times at the edge
• High levels of safety and reliability for mission-critical tasks
• Advanced sensor integration to perceive and react to complex environments

By unifying these efforts, Arm aims to deliver platforms that can be reused across robots and vehicles, shortening development cycles and lowering costs for manufacturers.

Robotics as Long-Term Growth Engine

Arm’s leadership views robotics as a major long-term growth market for its technology. The new Physical AI division will invest in teams dedicated specifically to robotics, expanding beyond Arm’s traditional strength in smartphones and other consumer devices.

Drew Henry, who will lead the Physical AI business, has framed robotics as a way to enhance labor rather than simply replace it, arguing that intelligent machines can free up human time and potentially boost economic output in countries that adopt them at scale.

The CES ‘Year of the Robot’ Backdrop

The reorganization was outlined around the CES trade show in Las Vegas, where humanoid and industrial robots have become a central theme. Across the exhibition floor, companies demonstrated machines capable of:

• Assisting with vehicle manufacturing and logistics
• Automating tasks such as cleaning and basic maintenance
• Performing service work, including handling goods and simple interactions

This surge of activity underscores why Arm is betting that chips optimized for real-time, on-device AI will be a critical enabling technology for the next wave of automation.

Business Model and Strategic Shift

Arm does not manufacture semiconductors itself. Instead, it provides the underlying chip architectures used in the majority of the world’s smartphones and an increasing share of laptops, data center processors and specialized accelerators. The company earns revenue through licensing its designs and collecting royalties when partners ship products built on its technology.

In recent years, under CEO Rene Haas, Arm has pushed to increase the value of its offerings by:

• Assisting with vehicle manufacturing and logistics
• Assisting with vehicle manufacturing and logistics