Report: Apple Pays Less Than 30 Cents in Royalties to Arm Per Chip

[MacRumors]

Apple pays British chip architect Arm less than 30 cents per chip in royalties, The Information reports.

Apple licenses the underlying technology used in the iPhone, iPad, Mac, Apple Watch, Apple TV, and HomePod from Arm. Despite being one of its biggest and most important customers, Apple represents less than five percent of Arm's annual revenue, with the company paying the least of any of Arm's smartphone chip customers. Apple pays a flat fee of less than 30 cents in royalties for each chip used in its devices, regardless of how many cores it has.

SoftBank is the owner of Arm, and in 2017, the company's CEO gathered Arm executives and explained that Apple pays more for the piece of plastic that used to be used to protect the screens of new iPhones than it does to license Arm's intellectual property. SoftBank's attempts to renegotiate Arm's deal with Apple to raise royalty rates were apparently unsuccessful.

While Apple is unlikely to sever its ties with Arm, the company has apparently explored the long-term possibility of using a competing open-source technology for its chips called RISC-V. Apple's current licensing agreement with Arm was signed in September and it "extends beyond 2040," but the chip architect is said to have continually attempted to renegotiate its financial terms.

Article Link: Report: Apple Pays Less Than 30 Cents in Royalties to Arm Per Chip

 

[Spaceboi Scaphandre]

I mean is this even a surprise? Apple was one of the founding supporters of Arm so they're grandfathered in.

 

[tomnavratil]

Not surprising considering the long-lasting relationship Apple has with Arm to be honest - it was certainly beneficial to both parties in the past.

 

[JitteryJimmy]

Apple has a very long history with ARM, and so who knows what kind of private financial and licensing agreements they came to decades ago.

 

[GeoStructural]

Not surprising considering the long-lasting relationship Apple has with Arm to be honest - it was certainly beneficial to both parties in the past.

As far as I remember Apple was one of the founders of Arm, and recently the new push for it in commercial computers can be attributed to Apple as well, before these chips were used in low power devices, I see no problem with Apple reaping the benefits now.

 

[till]

It's a sweet deal for ARM, tens of millions of dollars every year just for providing an instruction set. Apple still does all the actual chip design themselves.

 

[snak-atak]

Apple took a risk and invested heavily in the future of ARM years ago. Now it’s paying off, not just for Apple, but for ARM as well.

 

[mazz0]

ARM: I know you don't have to pay more because you have a contract, but will you?

Nobody ever: Yeah, OK!

 

[Apple Knowledge Navigator]

At Apple, they call this a "Doing an Ireland"

 

[elvisimprsntr]

It’s that $0.30 per core or per SoC?

 

[djphat2000]

It’s that $0.30 per core or per SoC?

SoC

 

[canadianreader]

It’s that $0.30 per core or per SoC?

Apple pays a flat fee of less than 30 cents in royalties for each chip used in its devices, regardless of how many cores it has.

 

[djphat2000]

Nice Job Apple! I ❤️ IT!

 

[iBluetooth]

Note, that Apple is not using the ARM chip designs, only their ISA and develops its own chip designs. Thus, 30 cent per chip is reasonable for only the ISA.
Missing from the report is that ARM was established by Apple, Acorn Computers and smaller firm, so that Apple could license their ISA. Apple is a founder, but sold it's stake when it was almost bankrupt. Thus, Apple has a good deal with ARM, as it should.

 

[now i see it]

That’s one way to become a trillion dollar company

 

[gumbyhw]

I mean is this even a surprise? Apple was one of the founding supporters of Arm so they're grandfathered in.

Apple sold their interest in ARM during their near death experience when they were scrounging through the sofa cushions for spare change. Although I like to think of “what if”, in reality that was a good decision.

 

[xnu]

The term is "snookered," as in; Apple "snookered" ARM into signing away any profit for the next 25 years. Tomorrows word is "shrewd."

 

[bigjnyc]

Apple must have a master negotiator on the payroll. between this and the Apple card terms with Goldman.

 

[reden]

Softbank is just butthurt they've lost so much money on other terrible investments, like WeWork.

 

[gumbyhw]

> Apple represents less than five percent of Arm's annual revenue

Im sure ARM benefits from the marketing value from Apple’s muscular chips, which until the M series were considered basically embedded parts only.

i don’t think people really recognized how powerful phones were until Apple shipped laptops with ARM in them. That’s silly: the chips aren’t the same, being designed for different design points, so enthusiasts are overfitting in the opposite direction. But that’s how we humans work.

 

[rgwebb]

30¢ * a sufficiently large number = a lot of money

 

[JH101]

they should be charging them an ARM and a Leg........I'll get my coat 😀

 

[kiranmk2]

SoftBank is the owner of Arm, and in 2017, the company's CEO gathered Arm executives and explained that Apple pays more for the piece of plastic that used to be used to protect the screens of new iPhones than it does to license Arm's intellectual property. SoftBank's attempts to renegotiate Arm's deal with Apple to raise royalty rates were apparently unsuccessful.

Softbank isn't the owner of Arm - they IPO'd earlier this year and are now a public company

 

[jaw04005]

Apple sold their interest in ARM during their near death experience when they were scrounging through the sofa cushions for spare change. Although I like to think of “what if”, in reality that was a good decision.

It took them to 2003 to fully divest. Apple wasn't struggling in 2003, but nevertheless they sold their remaining stake anyway.

Im sure ARM benefits from the marketing value from Apple’s muscular chips, which until the M series were considered basically embedded parts only.

Even better, ARM's recent IPO was bolstered by a last minute agreement with Apple to extend licensing through 2040 and beyond.

They had every opportunity to do something different if they didn't like the terms.

 

[blazerunner]

LOL, and they take 30% from developers selling on the App store. This company is the pinnacle of GREED.