ARM Wants To Rate Chip Licenses And Print Money

Smartphones and other devices based on ARM chips could become more expensive in the future because the British chipmaker wants to significantly raise the prices for its architecture licenses. In the future, the licenses are to be valued according to the sales price of the finished devices.

As the Financial Times reports, citing information from several major chip manufacturers, ARM wants to fundamentally change the model for marketing its chip designs. Instead of asking the chip suppliers who license ARM’s designs to build their own chips with the architectures of the British developers based on the sales price of the finished chips, the device suppliers should pay in the future.

The basis is said to be the value of the finished device so that ARM itself could earn many times more because the selling prices of the complete devices are significantly higher than the prices that the chip manufacturers call for their products. Accordingly, ARM no longer grants licenses for its architectures to the chip manufacturers, but only directly to the device manufacturers.

ARM is testing the limits of its virtual monopoly on chips for mobile devices

ARM wants to throw the business model it has pursued for decades, which allows all interested chip manufacturers to build their own chips based on the company’s designs if they acquire the appropriate license, over the top. Apparently, ARM wants to restrict the big licensees such as Qualcomm, MediaTek, and Samsung, who develop and build their own ARM-based chips in order to then sell them to various customers from the smartphone market.

ARM only wants to give the major chip manufacturers a “development license” in the future, but in turn, wants to prescribe to whom the finished chips can be sold. The device manufacturers should then pay the license fees directly to ARM. Apparently, the main focus is on the smartphone market, since the Financial Times says the chips in the ARM Cortex-A series are said to be primarily affected by the new license model.

The project would also primarily affect the manufacturers of Android devices, it is said. Apple is left out due to its special role as a chip and device manufacturer. The fact that the prices for certain technology licenses are based on the sales price of the products equipped with them is a very common model, which companies such as Qualcomm, Nokia, and Ericsson use, especially for their mobile phone patents.

Apparently, ARM’s primary concern is to make more money out of the chip architecture licenses that are practically essential for mobile devices. Behind this is primarily the wish of the investment group Softbank, which as the owner of ARM is working towards an IPO for the company and therefore wants to significantly increase the income and profits of the chip manufacturer.