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AI Transforms the Chip Industry
May. 04, 2026 –
The old semiconductor licensing model no longer suffices to power AI’s ferocious appetite.
By Christopher Cytera, cepa.org
Over the past decade, a paradigm ruled the semiconductor industry. Britain’s Arm produced the basic designs. American companies led by Apple, NVIDIA, and others designed the chips. Taiwan’s TSMC built the foundries that manufactured them.
AI is upending this division of labor, opening the door to new entrants and increased specialization.
Arm is the poster child for this transformation. It plans to build and sell its own chips for AI data centers. This represents a historic shift away from the British company’s traditional, neutral model licensing instruction sets, collecting upfront fees and then a small royalty per chip. Although AI players still license Arm’s intellectual property, the fastest growth now lies in tightly integrated, custom chips co‑designed with foundries.
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