Chip design company Arm Holdings Plc has created a new Physical AI business unit that’s going to be focused on developing semiconductors for robotics and intelligent cars.

The announcement was made today at CES 2026 in Las Vegas, where robots have been a major theme, along with “physical AI” models aimed at improving how they work. The sprawling Las Vegas trade show saw dozens of companies, large and small, demonstrate new robots that can work in warehouses and build cars, clean toilets and even deal cards at a poker table.

Reuters reported that Arm is splitting off its new Physical AI business from its Edge division, which is primarily focused on chips for mobile devices. The chipmaker also operates a Cloud and AI unit. The Physical AI unit will also develop chips for vehicles, the report said.

Arm has decided to bundle its robotics and automotive chip design business together because they share many similarities in terms of the kinds of sensors and technology they rely on, as well as power constraints and safety considerations. Arm does not manufacture chips itself, but instead provides the underlying architectural designs and intellectual property. It’s used by other companies to develop chips for the vast majority of the world’s smartphones and other devices, such as laptops and data center processors. Arm makes money through licensing fees and royalties.

The U.K.-based company has been looking to expand its business, however. Under Chief Executive Rene Haas, who took over about four years ago, the company has started developing more complete chip designs for some customers, charging more money for them. It’s also considering developing its own, complete chips for the first time.

The Physical AI business is another effort by the company to grow its revenue. The division will be led by Executive Vice President of Physical AI Drew Henry, who told Reuters that robotics has the potential to “fundamentally enhance labor” and “free up extra time.” He believes robotics can significantly boost the gross domestic product of nations that adopt them.

Henry declined to name specific customers when asked about this, but said the company is happy to “work with everyone.” That said, it’s known that Boston Dynamics Inc., the robotics company that was previously owned by Google LLC before being sold to SoftBank Group Corp. and later, Hyundai Motor Group, uses Arm’s chip designs in its machines.

Boston Dynamics was one of the stars of the show at CES, where it unveiled a new humanoid robot called Atlas that’s capable of working autonomously in industrial settings. It stands at a towering six-feet, three-inches tall and weighs around 200 pounds, and is already in production. One of the first customers is Hyundai itself, which will use Atlas robots in its vehicle manufacturing facility in Savannah, Georgia, to help build cars.

Many technology companies believe that advances in artificial intelligence automation can take robots to the next level, giving them the smarts they need to operate alongside humans in various industries. Tesla Inc. CEO Elon Musk has previously said that the company’s Optimus humanoid robots are key to its future, and has predicted that it could eventually generate revenue that dwarfs that of its electric cars.

This week, the autonomous driving company Mobileye Global Inc., which is part owned by Intel Corp., revealed that it’s going to acquire a robotics firm called Mentee Robotics Ltd. for $900 million. Meanwhile, AI chip leader Nvidia Corp. announced a new open-source AI model at CES called Alpamayo 1, which it hopes will be used to train the navigation systems of autonomous vehicles.

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