Apple will pay Arm a ridiculous amount for chips for iPhone and Mac

Technology hand This is a fundamental part in the production of chips for mobile devices. Today, almost all smartphone manufacturers use the same architecture in the processors that give life to their products. Obviously they have to pay fees British company for each chip produced. However, you will be surprised to know the absurd amount Apple pays for every device equipped with an ARM-based chip.

Report Information shows that Apple shells out less than 30 cents for every product with an ARM chip. This includes, of course, the iPhone, iPad, AirPods, Apple Watch and, more recently, the Mac, which has adopted ARM architecture following the transition to Apple Silicon.

The above-mentioned media note that at the moment This is the lowest Arm royalty on the market.. It is so inferior compared to other manufacturers’ products that it accounts for barely 5% of the British company’s sales. You would think that due to the large volume of products that Apple sells, especially in the smartphone sector, that they would have a larger presence in Arm’s coffers, but that is not the case.

This is fine? Well no, not at all. Actually, Information emphasizes that Arm is not at all happy with the current agreement they have with Apple. Obviously, a SoftBank subsidiary could command significantly higher payouts. The problem, of course, is that they cannot break an existing contract.

Arm can’t renegotiate agreement with Apple

Apparently, when SoftBank bought Arm in 2016 for $28.95 billion, it tried to restructure the deal with Apple. Masayoshi Son, founder and CEO of Softbank, moderated the conversation. Unfortunately for them, negotiations with the people of Cupertino turned out to be unsuccessful. Those led by Tim Cook ensured the current contract was upheld..

So if Arm and SoftBank really want to change the percentage of royalties they receive from Apple, they will have to wait until the current agreement ends. But this is a big drawback because expires after 2040. It is so long that only both parties know the exact date.

Armagh has another problem. If the pay increases, Apple may threaten to abandon ship. The Californian company has already expressed interest in architecture RISK-V, an open source alternative to ARM. Rest assured that at some point they will be willing to switch to a different chip technology if necessary. Even introducing RISC-V would mean eliminating royalties.

On the other hand, Arm can’t deny that the partnership with Apple has brought them significant benefits. And other manufacturers, seeing the path of success that Apple is following with this architecture, also sat down to negotiate with Arm to take advantage of its technology.

Qualcomm, for example, is going to expand its presence not only in the smartphone and tablet segment. Earlier this year, they announced the Snapdragon X Elite, an ARM chip for Windows laptops. No doubt they stepped on the accelerator after seeing Apple find success with the M chips, which boast superior performance and power efficiency in Macs.