William Gallagher
Following Arm's recent initial public offering, it has reportedly been unsuccessfully pressing Apple to pay more than $0.30 per iPhone for its intellectual property.
Apple and Arm have a history that goes back decades to the Newton era. Back in the late 1980s, Apple even owned 43% of the company, but it steadily sold off its shares through the next decade.
Most recently, Arm issued its first IPO, and according to Reuters, Apple has invested somewhere between $25 million and $100 million.
Consequently, a new report from The Information that initially describes Arm as a straightforward supplier to Apple is unclear. Nonetheless, the report concentrates on the intellectual property licensing fees that Apple pays Arm.
According to Wednesday's report, Masayoshi Son, CEO of Arm's parent company SoftBank, gathered management to lecture them about how little money Apple pays.
Reportedly, Son told Arm management that Apple pays more for what The Information describes as "the piece of plastic that protects the screens of new iPhones" than it does to Arm.
Six years later, and after a blockbuster intellectual property licensing deal that will run for decades, Apple is reportedly paying Arm under 30 cents per device. This is said to be the lowest rate that any firm has with Arm, and specifically around half of what Qualcomm and Mediatek pays.
Apple is said to account for under 5% of Arm's total sales, and in the financial year ending March 31, 2023, Arm reported $524 million net income.
Apparently, Son is still waving an iPhone around in meetings, according to unspecified sources, unhappy at how Arm can be earning so comparatively little when its processors are in so many devices.
At some point since 2016, Softbank's Son phoned Tim Cook to say that Arm would be raising its prices. Reportedly, Cook's staff just referred Son to the contract Apple had with Arm.
With that door shut, Son tried getting Arm to raise prices with every other company it works with, and those firms pushed back enough that the plan was scrapped.
That contract between Apple and Arm was due to expire in 2028. The two companies have since signed "a new long-term agreement with Apple that extends beyond 2040," said Arm in September 2023, "continuing our longstanding relationship of collaboration with Apple and Apple's access to the Arm architecture."
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15 Comments
Yes -and just as Fujitsu designed the SVE SIMD extensions for ARM, it was Apple that created the 64-bit ARM ISA (v8+), totally redesigning it in the process, as they were the first company on Earth to require 64-bit ARM CPUs. We used to joke about how the new ISA was "ARM" in name only. So in theory, they could license the ISA to ARM. And of course, Apple hasn't used the ARM microarchitecture since the Newton - it's a total Apple design. So what benefit does Apple get from the ARM name? Just participation in a wide software ecosystem, where people have already created "ARM" versions of popular software, vs the smaller number of companies who would make things for "Apple Silicon".
I wonder why anyone would think Apple would voluntarily pay more… surely ARM must have offered *something* to justify higher royalties. If not, one must question their competence.
I suspect that the ARM ISA is of limited value to Apple. Software compatibility with other ARM chips is almost completely irrelevant to Apple. The only value to Apple is that they don’t have to develop their own ISA or switch to another. But Apple could pretty easily do either of those things if necessary. So it seems to me ARM has no chance of getting more from Apple.
Change your licensing fees, ARM.
The timeline for the current agreement is longer than the timeline for Apple to stay on a given processor architecture. Just saying…