In February, when AMD chief technology officer Mark Papermaster was asked the question on everyone's mind during the company's annual powwow with the dollar counters of Wall Street, he played coy.

In its never-ending battle to compete with chip giant Intel, would AMD join forces with ARM, the company whose chip technology has come to dominate the mobile world and may soon find some serious purchase in the server world as well?

"The answer is not no," Papermaster said.

Five months on, the inevitable has happened. On Wednesday, AMD announced that it has indeed signed a deal to license ARM's chip architecture. But the pact isn't quite the revolution many were expecting. That revolution may still come, but for the moment, AMD says it will merely use ARM technology to build new security tools into the chips it's designing for tablets and other devices. It will not build entire processors based on the ARM architecture – at least not yet.

AMD has licensed ARM Cortex-A5 processor architecture – an architecture much simpler than what you find in, say, an iPhone – and this will be used to add new security tools into AMD's APUs, or accelerated processing units, chips that include both a CPU and a graphics processor. Including mechanisms for encrypting data, these security tools are designed to prevent outsiders from accessing sensitive information handled by a wide range of computing devices.

These APUs chips will debut in handhelds, but will eventually be added to other hardware. "We'll start with tablets and fan-less PC products but then move into products ranging from laptops, desktops, and ultimately cloud servers," AMD chief information officer Mike Wolfe tells Wired. "We want to create a consistent ecosystem that provides end-to-end security from mobile devices all the way to the cloud server."

The idea is to help hardware and software makers build applications that let you, say, make secure payments with your cell phone – an area where many companies are already making headway. After acquiring security outfit McAfee, Intel is also beefing up the security tools inside its processors.

According to AMD fellow Leendert van Doorn, the company chose ARM because there is already a large "ecosystem" of software and hardware makers familiar with the architecture. "Initially, we started off on a design path that had used proprietary technology," he says. "But that would mean enabling the entire ecosystem ourselves, and that would be quite a burden."

The first chip is due to arrive at the end of 2013.

In the past, Papermaster and others at the company have hinted that AMD will one day build server chips based on the ARM architecture. In recent years, several companies have worked to create a new breed of server driven by low-power chips not unlike the one in your iPhone, and in March, AMD acquired one of these companies: a Silicon Valley outfit called SeaMicro. Ironically, SeaMicro's server currently use chip's from AMD rival Intel, but Papermaster and company have made it clear they intend to move SeaMicro in a new direction.

AMD's existing processors are based on the x86 instruction set, which was developed by Intel and has become the de facto standard for desktops, laptops, and servers. AMD is Intel's primary rival where these machines are concerned, and if it starts designing ARM chips, this could help loosen Intel's longstanding dominance over the market.

Asked if Wednesday's pact was a sign that AMD will eventually license newer ARM technology for entire server chips and other microprocessors, van Doorn demurred. "The announcement we're making today centers around security," he said.