Intel Arc GPUs use DirectX 9 to DirectX 12 emulator, no native DX9 API
Intel Xe and Arc GPUs will use DX12 to emulate DX9, with Arc GPUs featuring no native DX9 support whatsoever, Microsoft's D3D90n12 interface is used.
Intel has officially dropped native DirectX 9 hardware support for its integrated Xe GPUs on its 12th Gen Core "Alder Lake" CPUs, as well as its upcoming Arc A-series desktop GPUs.
In its place, Intel will be using a DX9 to DX12 emulator called "D3D9On12" from Microsoft, where it will send 3D DirectX 9 graphics commands to the D3D9On12 layer, instead of directly to the D3D9 graphics driver. As soon as the D3D9On12 layer gets the command from the D3D9 API, it will convert all of the commands into D3D12 API calls.
D3D9On12 is pretty much a GPU driver on its own, instead of a GPU driver with DX9 support from Intel. Microsoft says that the performance out of its DX9 to DX12 emulator should be nearly, if not as good as native DX9 hardware support. I don't see how native DX9 hardware support inside of Intel Xe and Arc GPUs isn't here, but DX9-based games should be able to run even on the mid-range first-gen Arc A-series GPUs.
Intel will from here on out focus on optimizing its Arc GPU drivers for DirectX 11 and DirectX 12, while native DirectX 9 support will remain for Intel's GPU architectures before the Xe GPU. Intel explains about the DirectX 9 to DirectX 12 emulation on its 12th Gen Core "Alder Lake" CPUs and their integrated GPUs, as well as their Arc discrete GPUs, below:
Does my system with Intel Graphics support DX9?
12th generation Intel processor's integrated GPU and Arc discrete GPU no longer support D3D9 natively. Applications and games based on DirectX 9 can still work through Microsoft* D3D9On12 interface.
The integrated GPU on 11th generation and older Intel processors supports DX9 natively, but they can be combined with Arc graphics cards. If so, rendering is likely to be handled by the card and not the iGPU (unless the card is disabled). Thus, the system will be using DX9On12 instead of DX9.
Since DirectX is property of and is sustained by Microsoft, troubleshooting of DX9 apps and games issues require promoting any findings to Microsoft Support so they can include the proper fixes in their next update of the operating system and the DirectX APIs.