The goal of the joint venture was made to challenge the PC chip monopoly that $INTC held with its x86 architecture. In the end, they failed to challenge Intel's monopoly because Intel partnered with $MSFT to make chips that powered its Windows operating system. As PCs around the world were powered by Windows software, it needed to be powered by Intel chips. Since Windows dominated computer software, partnering with Microsoft meant that Intel can make chips that Windows-run computers would rely on.

Before Apple went to Arm and asked it to design and manufacturer the chips for its iPhone, Apple went to Intel. Since it was 2006 and the first iPhone was still in development, many people couldn't comprehend the potential that the smartphone industry had on the world. Intel's CEO chose to dismiss the opportunity because he thought that smartphones would be a niche product. Since then, Apple has been designing the chips of iPhones to be compatible with Arm's architecture.

Today, Arm designs the chips that power 99% of the world's smartphones. This monopoly does not look to be undermined by any competitors as Arm Holdings has said this in their prospectus: "With the complexity of CPU design increasing exponentially, over the past decade no company has successfully designed a modern CPU from scratch."

While most monopolies are asset-heavy (like railroads, pipelines, utilities), Arm is an asset-light monopoly. It doesn't produce and sell chips themselves like Intel or the combination of TSMC and Nvidia. Instead, it licenses its architecture to companies that want to manufacture off-the-shelf chips, as well as its instruction sets to companies that want to design their own Arm chips. Above licensing fees, Arm earns a royalty for every device sold with an Arm chip. In other words, it's in the business of monetizing its intellectual property to its fullest potential.

As companies like $AMZN look to design custom in-house chips, Arm is able to find opportunities outside of the smartphone market. In their prospectus, Arm notes that "...Arm-based products such as Amazon’s Graviton, deployed across Amazon data centers globally, have demonstrated the opportunity to create a sustainable competitive advantage through this approach. For example, Amazon claims that Graviton delivers up to 40% better price performance over comparable x86-based systems. This trend of increasing use of in-house developed solutions has significantly expanded the opportunity for Arm." In other words, Arm's chip designs are also used to power data centers. That's probably why regulators had anti-trust concerns when $NVDA tried to acquire Arm.

Arm is a great business. Valuation may not matter in the long run if the business continues to perform as great as it has performed historically.