Arm plans to charge device makers for chips based on device value in auction to boost revenue: report
Arm, owned by Japan’s SoftBank Group, is seeking to raise prices for its chip designs, in a bid to boost revenue ahead of an initial public offering in New York, the Financial Times reported on Thursday.
The British chip designer recently informed several of its customers of a “significant change” to its business model, the newspaper said, citing several industry executives and former employees.
Arm intends to change its royalty program, stopping charging chipmakers royalties for using its designs based on a chip’s value, and instead charging device makers depending on the value of the device, according to the report.
As a result of this change, Arm expects to generate several times more revenue for each design sold, as the value of an average smartphone far exceeds that of a single chip.
“Arm goes to customers and says, ‘We’d like to get paid more for the same thing,’ a former senior executive who left the company last year told FT.
MediaTek, Unisoc, Qualcomm and several Chinese smartphone makers, including Xiaomi and Oppo, are among the companies that have been notified of the proposed pricing policy changes, the report adds.
Arm did not immediately respond to Reuters’ request for comment.
The company will likely aim to raise at least $8 billion (around Rs 65,800 crore) from what is expected to be a successful launch in the US stock market this year, sources told Reuters earlier this month. .
© Thomson Reuters 2023
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