Arm Holdings ARM is increasingly at risk of slower growth in China due to the country’s accelerating pivot toward RISC-V architecture. In fiscal 2025, China was the company’s second-largest revenue source after the United States, contributing 19% of its total sales. However, revenues from China rose only 7.5% year over year, a concerning signal in a country with deep chip demand and vast industrial needs.
This sluggish pace appears tightly linked to China’s growing ambition to localize its semiconductor ecosystem. As part of this strategy, the Chinese government is preparing to promote RISC-V, an open-source chip architecture, as an alternative to Arm’s and x86’s proprietary models. Because RISC-V enables customization without licensing fees, it offers significant cost advantages and design flexibility, which are key priorities for China as it seeks to reduce dependence on Western technologies amid ongoing geopolitical tensions.
The Chinese ecosystem is already moving fast. Major tech firms such as Alibaba Cloud, Huawei, Tencent and ZTE are premier members of RISC-V International. Alibaba’s XuanTie and Nuclei System Technology are leading domestic providers of RISC-V chips, and the recent unveiling of RIVAI Technologies’ high-performance Lingyu server chip demonstrates China’s growing capabilities in advanced RISC-V innovation. As the Chinese government finalizes policy guidance to back this transition, Arm’s foothold may weaken further, especially if local champions continue gaining traction.
While Arm may feel the brunt of China’s RISC-V push, NVIDIA NVDA and AMD AMD are watching closely.
NVIDIA has a deep exposure in AI hardware and data centers, both critical segments where RISC-V could encroach if local alternatives scale effectively. Its ecosystem depends on international design freedom — something RISC-V threatens in China’s closed-loop ambitions.
Meanwhile, AMD faces a similar challenge. Its EPYC server chips compete directly with China’s new Lingyu RISC-V server chip. If adoption accelerates in China, AMD’s market share in hyperscale and enterprise deployments could erode.
Both NVIDIA and AMD now must navigate a dual challenge — innovation and geopolitical barriers. With China leaning into RISC-V, both companies will likely reassess their regional strategies as Arm’s struggles become theirs as well.
The stock has gained 18% year to date, significantly outperforming the industry’s 5% rally.
>Image Source: Zacks Investment Research
