ARM To Reportedly Modify Its Royalty System; Will Charge For Entire Phone Rather Than SoC

[Kuttz]

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https://wccftech.com/arm-royalty-shift-strategy-will-charge-for-entire-smartphone-now/

Rising component prices are one reason why future smartphones are expected to be pricier, but ARM is contemplating a decision that may affect their value all the same. According to the latest report, instead of charging manufacturers like Samsung and Qualcomm a percentage of royalties for the silicon, the British firm now wants to charge a sum according to the price of the entire handset.

Instead of charging a percentage of each chipset sold, ARM could now charge manufacturers a percentage of the smartphone’s entire price. This means that companies like Samsung, Google, and several others may either have to slash their margins while selling their handsets at the same price or pass those increases to consumers, who will have to pay more for each smartphone. Given that the global economy is not in the best shape, it is difficult for consumers to pay a high price for a device, and that can mean overall shipments can decrease further.

The decision to alter its royalty structure likely comes as ARM is expected to hold an IPO event later this year in New York. The firm has already informed its major clientele in advance regarding the possible shift in its business model, bracing them to make changes accordingly. However, Revegnus on Twitter appears to believe that Apple is unaffected by this change. Rumor has it that Apple struck a ‘special type of agreement’ with ARM, meaning that it could possibly be the only rare entity that does not get affected by the new royalty calculations. Of course, phone makers and chipset manufacturers alike will have to strategize on their next step when it comes to a sustainable business, especially now that they will have to pay more royalties to ARM.

ARM To Reportedly Modify Its Royalty System; Will Charge For Entire Phone Rather Than SoC, Potentially Increasing Handset Prices

Instead of charging a percentage for a smartphone SoC, ARM is reportedly thinking to charge a royalty for the price of the entire device

wccftech.com

 

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Rising component prices are one reason why future smartphones are expected to be pricier

Phones that perform well have always been priced at far too high a markup.