It's called RISC-V, pronounced "risk five" — a rival chip design that is backed by some of Arm's own customers.
While analysts told CNBC it's not an immediate threat, Arm itself warned that if it gains traction, it could pose a competitive risk.
Arm designs what's known as an instruction set architecture (ISA) for chips known as processors or central processing units (CPUs).
RISC-V in recent years has gained support from some of the world's biggest technology companies, many of which are also Arm customers.
"Maybe we should have a second source just in case things start not going in our direction, or we have problems with Arm," he added, in reference to the thinking among some Arm customers.
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