ARM Holdings (ARM.US) plans to integrate NVIDIA's (NVDA.US) NVLink technology into its chips designed for artificial intelligence (AI) data centers, strengthening the partnership between these two influential semiconductor companies. The companies announced on Monday that ARM, the owner of the world's most widely deployed processor technology, will incorporate this interface technology into its Neoverse platform. NVIDIA is the dominant supplier of semiconductor chips used in AI infrastructure, and NVLink has become a critical tool for connecting large numbers of such chips.

Under the leadership of CEO Rene Haas, ARM has begun offering more complete chip designs to its customers. This move is part of the company's strategy to increase revenue and expand into lucrative markets beyond its traditional stronghold—the smartphone industry.

NVLink serves as a bridge between chips—primarily NVIDIA's AI accelerators, which aid in developing and running AI software. It enables semiconductor chips to share information through ultra-high-speed connections and more efficiently break down large computing tasks. NVIDIA, the world's most valuable company, recently released an updated version of this technology called "Fusion" and opened it to other hardware manufacturers. This allows them to use the technology to connect non-NVIDIA chips to their computing infrastructure.

In September, NVIDIA reached a separate agreement with long-time rival Intel (INTC.US), under which Intel will adopt NVLink in some of its server products.

ARM has been making progress in the data center market through customers like Amazon Web Services (AWS) and Microsoft, gradually taking market share from Intel's Xeon processors, which once held 99% of the market. NVIDIA already uses ARM technology in processors paired with its own accelerators—it even attempted to acquire ARM, but the deal was blocked by regulators.

A closer collaboration between the two companies will help solidify NVLink's position as an industry standard. Meanwhile, ARM is working to sell its Neoverse technology to more hyperscale operators—the largest data center operators. The company has stated that its products are on track to capture 50% of the market share.

NVIDIA is set to report quarterly earnings this Wednesday, which should provide investors with insights into its growth trajectory—and whether large-scale AI computing investments remain on track.