Is ARM (Arm Holdings plc American Depositary Shares) Halal or Haram?

Based on our AAOIFI-standard shariah screening, ARM is Halal and considered permissible for Muslim investors. It passed all 4 of 4 compliance screens including business activity review, debt-to-market-cap ratio (0.25% vs ≤33% threshold), interest income ratio (2.89% vs ≤5% threshold), and cash & securities ratio (2.02% vs ≤33% threshold).

Arm Holdings is the architect behind the digital world, designing the blueprints for central processing units (CPUs) that power over 99% of the world's smartphones . Unlike traditional chipmakers that manufacture hardware, Arm licenses its intellectual property and architecture to giants like Apple, Qualcomm, and Nvidia , earning royalties on every chip produced. Their technology extends far beyond mobile, serving as the critical infrastructure for cloud computing, automotive safety systems, and the rapidly growing Internet of Things (IoT) sector. For Muslim investors, Arm represents a clean, shariah-compliant investment opportunity, having passed all four AAOIFI screening tests with a 'Halal' status. The company' s business model is fundamentally permissible, as it deals in technology licensing rather than prohibited industries. Practically, this means you can invest in the backbone of the semiconductor industry without needing to purify significant portions of dividend income or worry about mixed business activities. Financially, Arm is remarkably robust from an Islamic perspective, boasting a debt-to-market cap ratio of just 0.3%, which is virtually non-existent compared to the 33% allowable threshold. Furthermore, its cash and interest-bearing securities sit at a modest 2.0% of market cap, indicating that the company is efficient with its capital rather than hoarding cash in interest-bearing accounts. The primary figure to watch is the interest income ratio, currently at 2.89%; while safe now, investors should monitor this if interest rates rise significantly. Going forward, investors should keep an eye on Arm's expanding role in AI and data centers, which may change its revenue mix and capital requirements. However, given its current asset-light model and strong cash flow generation, it remains one of the most compliant large-cap technology stocks available today. Regular quarterly screening is recommended to ensure the interest income component remains below the 5% limit. Arm Holdings plc American Depositary Shares operates in the Technology sector under the Semiconductors industry and is headquartered in Cambridge, GB. The company is led by CEO Rene Anthony Andrada Haas and employs approximately 8,330 people.

ARM was screened using AAOIFI-based shariah compliance criteria. Four tests are applied: (1) Business Activity — the company's core business must not derive primary income from haram (prohibited) activities such as alcohol, gambling, tobacco, or interest-based finance. (2) Debt-to-Market-Cap — total debt must not exceed 33% of market capitalization. (3) Interest Income — interest income must not exceed 5% of total revenue. (4) Cash & Securities — cash and interest-bearing securities must not exceed 33% of market cap. ARM passed 4 of these 4 screens.

Although ARM passes all shariah screens, it does earn $116.0M in interest income (2.89% of revenue). Many scholars recommend purifying this portion by donating the equivalent percentage of any dividends received to charity. For example, if you receive $100 in dividends, you would donate approximately $2.89 to purify the income.

ARM was last screened on 2026-02-25. Shariah compliance status can change as companies report new financial data, acquire new businesses, or shift revenue streams. We recommend checking back periodically for the most up-to-date screening results.