I suppose it’s searching for the wifi connection instead of rebooting. 

https://support.sonos.com/en-us/article/sonos-led-lights​​​​​​

I recommend to update your wifi settings within Sonos app.

I use wired Ethernet to my Sonos gear.

Which device is wired? The Arc itself? Otherwise if Arc isn’t wired it still could be a problem of wireless connection. Even to the SonosNet…

If Arc is wired via lan… directly to the router?

Sonos Arc wired to an Ethernet switch, as is the Sonos Amp for the turntable. I don’t use WiFi for any AV components. On the Sonos app, it shows WiFi disabled.

So seems you habe disabled wifi at all in speaker settings. Your ethernet switch probably is igmp snooping ready and either unmanaged or set to correct stp settings I suppose. 
If so, I recommend to check lan cable connections an try another cable and /or port on the switch. 

Just checked: IGMP snooping enabled. I will try another port and change the cable. I doubt it’s that, but it’s possible? 

It really does feel like it’s rebooting. Like just now watching TV via HDMI ARC, the Sonos Arc LED starts blinking white, the TV switches back to TV speakers, and after a bit the LED stops blinking white and the HDMI-ARC audio is restored and the Sonos Arc is fine. Is the Sonos even using the Ethernet for anything at that point that would stop audio?

@MrZarniwoop 

Is it an Arc only setup? Or are there also any rear speakers and /or a sub?

Cable issue could be possible, but imo not, if connection get lost always in the same situation. 
 

Lan cable is just responsible for network connection. You could try to remove it and turn ob wifi for some testings to find out about the reason for your problem. 

I have a sub and surrounds. All wired.

I can move it all to WiFi, but not entirely sure what I’m testing? There’s no mention of blinking white having anything to do with Ethernet. And, if this is happening with HDMI ARC audio, that seems unrelated to network?

I’m going to disconnect the surrounds and sub. And try WiFi even though it seems odd as test to me.

@MrZarniwoop

The normal way for network communication within a home theater setup between Arc and bonded rears and sub is an internal wifi build up by the Arc. 
Maybe there’s a current issue with the special setup „all devices lan cabled and wifi disabled“. For that reason I asked to test the ht setup via wifi. 
 

In the end best would be to send a diagnosis after the problem appears and to call Sonos support team. 

Arranged an RMA with Sonos after yet another factory reset. All sorted now, it appears the Arc was defective.