Arm is tired of seeing device makers bring in billions while it makes millions:
What's in store for the future of chip maker Arm? The company's owner, Softbank, has been in financial trouble lately, and that has caused Arm to bounce from one dramatic possibility to another. Initially, Arm was put up for sale, and Nvidia was the front-runner to buy the company. That plan was shut down by regulators, and now "Plan B" is an IPO, which is supposed to happen on the New York Stock Exchange sometime this year. If you want to succeed on the stock market, you've got to show revenue, and while Arm enables the sale of billions of dollars of devices around the world, the company's chip licensing scheme only brings in a comparatively small amount of money—around $500 million a quarter.
The Financial Times has a report on Arm's "radical shake-up" of its business model. The new plan is to raise prices across the board and charge "several times more" than it currently does for chip licenses. According to the report, Arm wants to stop charging chip vendors to make Arm chips, and instead wants to charge device makers—especially smartphone manufacturers—a fee based on the overall price of the final product.
Let's say Motorola makes a phone with a Qualcomm Snapdragon Arm chip. Previously, Qualcomm would have signed a deal with Arm for an Arm license, and that license would extend to anyone that buys a Qualcomm Arm chip, like Motorola. Qualcomm contributes a lot to its own chip designs, but when it comes to the Arm license it is basically an Arm reseller. Arm would now want a licensing fee from Motorola (and not Qualcomm?), and it would ask Qualcomm to not sell chips to anyone that doesn't have a licensing agreement with Arm.
[...] The report quotes a former senior employee as saying, "Arm is going to customers and saying, 'We would like to get paid more money for broadly the same thing.' What SoftBank is doing at the moment is testing the market value of the monopoly that Arm has."
If customers decide they don't like Arm's new pricing structure, the competition is getting closer than it ever has before. While Arm is basically a mobile monopoly in everything smaller than a laptop, RISC-V is an upstart project that promises power-efficient chips under a royalty-free open source license. While Arm has an incredible amount of ecosystem support with device designs, a large user base, and a million developer tools, Arm's continual drama is making a switch to RISC-V look more worth the effort with each passing day.
(Score: 2) by JoeMerchant on Monday March 27, @06:39PM (2 children)
I think I'll just hold my Softbank shares and take whatever profit this gives them.
I originally bought Softbank just after (and because) they acquired ARM, because ARM (was?) a product I believe(d) in.
This may, or may not pay off for ARM in the future, either way, I'd rather not be a part of it.
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(Score: 3, Insightful) by turgid on Tuesday March 28, @06:57AM
In the very short term, this might put the value of ARM/Softbank shares up as they exploit their monopoly. However, meantime, the rest of the world will be pouring resources into RISC-V development and in 18 months to two years, RISC-V smart phones will start to appear on the market.
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 0) by Anonymous Coward on Tuesday March 28, @03:59PM
(Score: 3, Insightful) by DadaDoofy on Monday March 27, @09:18PM (1 child)
So their plan is to encourage commodity phone makers to make even cheaper phones than they already do? Given the phones they currently make are barely profitable, how is this supposed to help?
(Score: 5, Insightful) by Snotnose on Monday March 27, @11:04PM
They claimed to be MBAs. They didn't claim to be smart.
I just passed a drug test. My dealer has some explaining to do.
(Score: 5, Insightful) by Zoot on Tuesday March 28, @04:33AM (6 children)
So instead of a tiny royalty on a $10 SoC, they have come up with the idea of charging a royalty on the total retail price of the $500 smartphone it goes in?
People will switch to new RISC-V designs so fast it will make your head spin, and ARM will be dead and buried.
Just by making the announcement that they want to do this, it will massively motivate the industry to push forward on getting RISC-V implementations caught up, and probably just doubled the investment in that area.
(Score: 0) by Anonymous Coward on Tuesday March 28, @04:02PM (4 children)
Is there any impact on Apple? I heard their M1 processors and phones are ARM based... The last I checked Apple's stuff is pretty expensive.
(Score: 3, Insightful) by turgid on Tuesday March 28, @04:45PM (3 children)
I dare say Apple has a lot of bargaining power. I'd also bet they have a Plan B and an Plan C. They went from m68k to PowerPC then to x86-64 then ARM. They'll move on to something else when the time is right.
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 3, Insightful) by driverless on Tuesday March 28, @10:50PM
They've already got the Apple-proprietary M1 line, given their tendency to move everything possible in-house so they control everything themselves it wouldn't surprise me if they have a totally Apple-designed completely custom-architecture Jobs1 CPU quietly brewing in the background somewhere.
(Score: 0) by Anonymous Coward on Wednesday March 29, @01:21PM (1 child)
Why do you say Apple has a lot of bargaining power? Currently ARM earns per CPU. I suspect Apple sells a lot fewer ARM CPUs than the android phone makers combined.
I doubt ARM would lose as much from Apple switching away than the Android bunch moving off.
Plus it's easier for the Android bunch to move off. They already use some JVM kinda thingy ( https://en.wikipedia.org/wiki/Android_Runtime [wikipedia.org] ) so they could move off en masse and still have most apps work.
In contrast Apple has many native code apps, so it'll be a bigger pain for Apple to move away from ARM.
Whereas if ARM succeeds in making everyone pay based on the final product they stand to make more from Apple.
(Score: 2) by turgid on Wednesday March 29, @05:45PM
First, it's about PR. Apple using your technology is a huge endorsement of it. Secondly, Apple will have invested a lot of money in their own improvements to the technology and various extensions that depend on it. I dare say some of that has benefited ARM. The licensing deal probably invovles co-engineering and collaboration that benefits both sides. ARM hasn't really been a presence in the desktop market since the Acorn Archimedes and the Acorn RISC PC back in the late eighties/early nineties. Apple will have done a lot of development work to make it suitable for workstation use.
Imagine if Apple were to say, "Sorry, we're going with RISC-V now. It's license-free and we can modify our add-ons to work with that. Also, we might contribute back some changes to the general design to make it faster."
What message would that send the market? I think Apple would have the money to put behind such a venture and to make a success of it. It would be a huge boost to the whole RISC-V ecosystem and brand.
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 2) by driverless on Tuesday March 28, @10:41PM
Yup. A better headline would have been "ARM Publishes Second-longest Suicide Note in History" (the longest was 39 pages in 1983).