The firm instructed employees to halt "all active contacts, support entitlements, and any pending engagements" with the Chinese telecommunications, the BBC reported, in order to comply with U.S. trade restrictions.
"Arm is complying with the latest restrictions set forth by the U.S. government and is having ongoing conversations with the appropriate U.S. government agencies to ensure we remain compliant," an Arm spokesperson told CNBC.
The semiconductor designer said it values its relationship with longtime partner HiSilicon, the chip division of Huawei, "and we are hopeful for a swift resolution on this matter."
A spokesperson for Huawei meanwhile said it recognized the pressure its suppliers are facing amid "politically motivated decisions."
"We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world."
The news is another blow for Huawei, which has faced intense political pressure from Washington over national security concerns. The U.S. administration recently added the firm to a trade blacklist that blocks it from buying U.S. technology without special approval.
Google had come out as an early mover in distancing itself from Huawei, however the tech giant recently said it would resume business with Huawei over the next 90 days after the U.S. eased restrictions on mobile and internet broadband firms.
You can read more about Arm's decision here.