Apple has been using Arm’s architecture in its processors for many years, and in the last few years has switched all devices, including the Mac, to Apple Silicon’s own ARM chips. However, despite the fact that they are sold in millions of units, Arm receives less than 5% of its revenue from their sales each year.
According to an insider from The Information, Apple pays Arm less than 30 US cents for each device, including iPhone, iPad, Mac and Apple Watch, sold each year. This figure is the lowest among buyers of ARM-based smartphone chips, which have traditionally been the company’s largest source of revenue. Consequently, Apple’s contribution to Arm’s sales is significantly lower than that of Qualcomm and Mediatek, each of which accounts for about twice Apple’s share.
Despite the longstanding license agreement between Apple and Arm, Tim Cook’s company has reportedly been exploring alternatives to the ARM architecture, such as the open source RISC-V technology, which does not require a license. However, the transition to this technology would require Apple to spend about a decade in development.
SoftBank CEO Masayoshi Son, who was interested in increasing Apple’s payments to Arm, failed when he tried to raise prices for all license partners that produce smartphones or chips for them. However, Apple CEO Tim Cook’s team noted that their contract with Arm has been extended until 2028, which does not include any fee increase. Since then, negotiations have taken place, but the financial terms of Apple’s agreement with Arm have remained largely unchanged.