Arm is planning to change its patent fee collection model
Recently, smartphone prices have increased to a certain extent due to the rise in component prices, but Arm may become another variable in the future. According to reports from relevant media, Arm plans to change its patent fee collection model and adjust the fees. The company has notified major manufacturers including Qualcomm, Samsung, MediaTek, Xiaomi, OPPO, and vivo, but most customers are unwilling to accept the changes.
Under Arm’s original business model, a certain percentage of fees would be charged to chip manufacturers based on the average chip price, in order to license them to use Arm’s architecture. Even chips like Apple’s A-series and M-series, which have been heavily modified, are still based on Arm’s architecture and are subject to patent fees. Now, Arm plans to change the fee collection basis to a certain percentage of the average price of terminal devices, collecting a licensing fee of 1-2% of the selling price for each smartphone.
As the average selling price of smartphones is much higher than the average chip price, this means that after Arm modifies the fee collection model, the patent fees that manufacturers need to pay will be several times higher than before. This will be the first time that Arm has significantly changed its business model in decades. In the future, if smartphone manufacturers continue to sell products at the same price, they can only reduce profit margins. If they increase selling prices, this cost will be passed on to consumers.
Currently, almost all mobile devices on the market use Arm’s chip architecture, making it difficult to break away from it in the short term. Arm can significantly increase its revenue in a short period of time. There are rumors that Arm has a “special type of agreement” with Apple, which is likely to be the only manufacturer not affected by the change.
Arm is expected to go public in the US later this year and is likely to announce its final decision before then.