Apple’s deal with ARM for using its chip technology is making headlines. According to a report from The Information, Apple will only be shelling out less than 30 cents in license fees for each device that incorporates ARM-based chips.
This fee is notably the lowest ever paid by any company to ARM for licensing its technology. To put it into perspective, Apple’s fees are supposedly just half of what major players like Qualcomm and Mediatek pay.
Surprisingly, despite Apple’s massive business volume, its dealings with ARM reportedly account for less than five percent of ARM’s overall revenue. This has left ARM feeling a bit sour on the financial front due to the meager returns from Apple’s licensing fees.
Now, ARM, the company responsible for creating chip designs used in devices across the globe, was taken over by the Japanese company Softbank in 2016. The CEO of Softbank, Masayoshi Son, apparently attempted to renegotiate ARM’s deal with Apple to make it more favorable for the company, but the efforts didn’t bear fruit. It’s still a mystery how long Apple has been enjoying such incredibly favorable terms in their contract with ARM.
What’s interesting is that Apple was actually one of the founding members of ARM, which might explain why they could swing such favorable terms in their favor.
Although the financial benefits for ARM from this deal with Apple are relatively low compared to other contracts, there are no signs of a breakup. In fact, quite the opposite—Apple and ARM recently inked a new deal extending their partnership all the way to 2040.
The Information speculates that despite the considerably lower licensing fees, ARM might still come out ahead in the deal because of Apple’s prestige. Moreover, ARM’s licensing agreement with Apple seems to have attracted new customers keen on emulating Apple’s achievements. So, indirectly, even with lower payments from Apple, ARM could be reaping other significant benefits from this partnership.
