Arm Plans to Charge Device Makers for Chips Based on Device Value: Report
Arm, owned by Japan’s SoftBank Group, is seeking to raise prices for its chip designs, as it aims to boost revenue ahead of an initial public offering in New York, the Financial Times reported on Thursday.
The British chip designer recently notified several of its customers of a “significant shift” to its business model, the newspaper said, citing several industry executives and former employees.
Arm intends to alter its royalty program, ceasing to charge chipmakers royalties for using its designs based on a chip’s value, and instead charge device makers based on the value of the device, the report said.
As a result of this change, Arm anticipates generating multiple times more revenue for each design it sells, since the value of an average smartphone far exceeds that of a single chip.
“Arm is going to customers and saying ‘We would like to get paid more money for broadly the same thing’,” a former senior employee who left the company last year told FT.
MediaTek, Unisoc, Qualcomm and multiple Chinese smartphone makers, including Xiaomi and Oppo, are among the companies that have been made aware of the proposed changes to pricing policy, the report added.
Arm did not immediately respond to Reuters’ request for comment.
The company is likely to aim to raise at least $8 billion (roughly Rs. 65,800 crore) from what is expected to be a blockbuster US stock market launch this year, sources told Reuters earlier this month.
© Thomson Reuters 2023