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Apple pays under 30 cents per chip in royalties to Arm: report

Despite being one of Arm's biggest customers, Apple represents less than five percent of its annual revenue

A new report reveals how much Apple pays to British chip architect company Arm. It’s not a lot.

According to The Information (via MacRumors), Apple pays less than 30 cents per chip in royalties to Arm despite using ARM chips in several products. (Arm, in this case, refers to the company, while ARM is the name for the chip architecture.)

Apple uses Arm’s technology in the iPhone, iPad, Apple Watch, Apple TV, HomePod and, most recently, in its Mac computers. The Cupertino, California-based company is one of Arm’s biggest and most important customers but represents less than five percent of its annual revenue. Apple reportedly pays the least of any of Arm’s smartphone chip customers, which also includes Qualcomm and MediaTek.

Apple reportedly pays a flat fee of 30 cents for each chip it uses, regardless of the number of cores in the chip. Arm develops the RISC instruction set architectures (ISAs) as well as designs cores that use those ISAs, and licenses both to other companies.

The Information also detailed how Arm’s owner, SoftBank, has unsuccessfully fought for a better deal. For example, in a 2017 meeting, SoftBank’s CEO said that Apple pays more for the piece of plastic that protects the screens of new iPhones than it pays to Arm.

Apple’s current licensing agreement with Arm reportedly extends beyond 2040. However, in typical Apple fashion, the company is reportedly exploring using an alternative technology to ARM — RISC-V. Unlike ARM, RISC-V is an open standard and is provided under royalty-free open-source licenses. Though Apple is exploring using RISC-V, it likely won’t jump ship any time soon.

Source: The Information Via: MacRumors

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