Smartphone chips could get significantly pricier as Arm ups licensing fees

Smartphone chips could get significantly pricier as Arm ups licensing fees
If you were following the news surrounding Apple recently, you probably heard about the company’s plans to switch to Arm-based Mac computers. It’s a big deal because Arm chips are almost exclusively used for mobile devices right now and the move will give Apple more control over their own products.

But now, it seems putting all eggs in the Arm basket might not be as profitable as Apple is hoping. Reuters reports that Arm, the company that’s holding the intellectual property behind the chips, is planning to increase its licensing fees for future deals with manufacturers.

According to the sources, the price hike will vary depending on the client but for some, the new fees could be four times higher. Arm partners include not only Apple but also Samsung, Qualcomm, Huawei and MediaTek.

Obviously, the licensing fee is only part of what makes up the final cost of a chip, but even so, a 4x increase is bound to make an impact. Chips are already one of the most expensive parts in a smartphone and the change in their pricing will likely affect smartphone prices across the board as well.

Arm was bought by SoftBank Group Corp in 2016 for $32 billion. Speculations have arisen that Apple’s commitment to developing Arm-based chips for all of its products has given SoftBank leverage to increase the licensing fees. We’ll likely never find out if that’s true as license agreements are confidential.

The insiders also report that some companies are already considering alternatives to Arm-based chips. However, even if they decide to go for it, a comparable technology will take years to develop to that level and billions in investments. Ultimately, paying the higher fees might prove to be the cheaper option.

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