Apple-Arm: Under 30 Cents per Device in Patent Fees

In a recent report by The Information, it has been disclosed that Apple is remitting less than 30 cents per unit to Arm, the prominent UK-based chip architecture firm, in the form of remarkably low patent fees. This equates to approximately 2.1388 Chinese Yuan. Apple extensively incorporates Arm-based chips across its diverse range of devices.

Insiders have disclosed that Apple's payment of less than 30 cents per unit secures the rights to utilize Arm-based chips within the hundreds of millions of iPhones, iPads, Macs, and Apple Watches sold annually. Despite several attempts by SoftBank Group, Arm's parent company, to renegotiate patent fees with Apple, these efforts appear to have fallen short.

Arm, recognized as a global leader in semiconductor intellectual property (IP), is renowned for designing the architecture behind over 95% of the world's smartphones and tablets. The company specializes in designing cost-effective, low-power RISC processors, related technologies, and software. Diverging from traditional semiconductor companies, Arm follows a unique business model wherein it designs energy-efficient Arm chip architectures and various chip technology solutions, subsequently licensing these solutions to external manufacturers without engaging in the production or sale of processors. Major technology players such as Apple, Samsung, and Qualcomm adopt Arm technology.

The report emphasizes that, despite being one of Arm's primary and most influential clients, Apple contributes less than 5% to Arm's annual revenue. Furthermore, Apple's payments constitute the lowest fees among all smartphone chip clients of Arm, representing approximately half of the contributions made by the two major clients, Qualcomm and MediaTek.

Nevertheless, given Apple's considerable influence in the smartphone industry, Arm has no intentions of severing ties over the issue of low patent fees. Both companies solidified their commitment in early September by signing a new cooperation agreement, extending their collaboration on chip technology licensing beyond the year 2040.