The US firm has announced that it will release its first ARM-based chips in 2014.
Advanced Micro Devices will produce the new chip based on the design produced by ARM and will be used to power computer servers that run websites and smartphone app services.
Making the deal even more significant is the fact that AMD, alongside Intel, has long been the producer of the rival x86 chip architecture.
Rival firms Dell and HP have also announced they plan to produce ARM-based servers.
ARM is set to benefit greatly from the deal, as the Cambridge-based firm only designs and licenses its chip designs and does not manufacture them.
AMD joins a long list of chip makers producing ARM designs, which includes Apple, Samsung, Qualcomm and Nvidia, who already produce the majority of chips that power the mobile devices market.
The move is likely to be a result of the growing demand for servers as more users use internet-connected devices and cloud-based applications.
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