Arm Changes Business Model for Royalties

Chip design company Arm informed several customers of an intended shift in the way it charges some royalties. Fees will be set to eventually become based on a percentage of the device selling price.

The new business model will take effect in 2024, according to Financial Times. The newspaper explained Arm’s current pricing model for most of its clients was based on gaining license fees and royalties from chipmakers, charged as a set percentage of the ASP of each chip. Following the floated change, it claimed, the royalty fee would be paid by manufacturers based on the device ASP, to derive more revenue from each unit.

Some large smartphone players already had specific deals with Arm, based on a different structure. Speculation on the company’s future model comes as parent SoftBank continues to progress with an IPO of Arm, which has been the subject of much media attention since a proposed Nvidia sale fell through in 2022.