Arm Holdings, a technology provider for chip companies, is developing a long-term strategy to increase prices by up to 300% and has discussed designing its own chips in a bid to compete with its biggest customers.
For decades, the British firm kept a low profile while operating at the center of billions of dollars in chip sales per year. It licenses the intellectual property that Apple, Qualcomm, Microsoft and others use to design their chips, charging a small royalty for each chip produced with Arm technology.
Despite being central to the rise of smartphones and energy-efficient data center chips, Arm has remained small compared to its customers, with $3.23 billion in revenue for fiscal 2024. In its largest fiscal year Recently, Apple’s revenue from its hardware products, which are all powered by Arm-based chips, was more than 90 times higher.
But Masayoshi Son, CEO of SoftBank Group, which owns 90% of Arm, and Arm CEO Rene Haas, are determined to change that, according to plans revealed in a trial last month in which Arm tried unsuccessfully to secure Qualcomm’s highest royalty rates.
Known in its early stages as the “Picasso” project, Arm’s plans, which date back to at least 2019, point to a roughly $1 billion increase in annual smartphone revenue over about 10 years, according to testimony. sealing of executives.
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Arm customers would not be subject to rate increases
Arm planned to achieve this in part by increasing the per-chip royalty rates that customers pay for off-the-shelf parts of chip designs that used its latest computing architecture, called Armv9.
During the trial, documents from August 2019 were shown in which Arm executives discussed a 300% rate increase. In December 2019, then-Arm CEO Simon Segars told Son, Arm’s chairman, that the company had reached an agreement with Qualcomm to use ready-made technology under the “Picasso” initiative. ”.
But Qualcomm and other big customers like Apple are sophisticated enough to design their own chips from scratch using Arm’s architecture without needing Arm’s more expensive off-the-shelf offerings, meaning they wouldn’t necessarily be subject to all of those. rate increases.
“We have preliminary legacy agreements with Qualcomm and Fender,” Haas said in a Microsoft Teams chat held on the day Qualcomm bought Nuvia in 2021, shown in court. The startup would help Qualcomm use less ready-made technology from Arm.
With information from Reuters
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