A couple of days after reports first emerged of SoftBank looking to sell Arm Holdings partially or do a public offering, a new report sheds light on how Arm has increased the licensing fees for some of its customers. The Reuters report claims that in recent negotiations, Arm representatives have hiked license costs by as much as four times for some customers. The move has led some of Arm's licensees to consider non-Arm alternatives.
“It’s created a lot of tension for us,” one Arm licensee told Reuters, saying the hikes seemed out of proportion to the improvements in the technology.
Arm's instruction set and CPU designs play a major role in almost every consumer product out there today, including smartphones, laptops, tablets, wearables, and more. The importance of Arm has only increased over the last decade with the rising popularity of smartphones. They are going to become even more important in the future as Apple has made its intention clear of switching its Mac lineup to custom Arm-based cores as they will offer better performance and efficiency to consumers. Some companies like Qualcomm license the instruction set as well as CPU core designs from Arm and pay a royalty on the latter. Others like Apple only pay the licensing fees for the instruction set and design their own CPU cores.
Arm already rakes in millions of dollars every year from licensing fees and billions of dollars in royalty fees from chips designed by it. A steep rise in Arm licensing fees could negatively impact consumers as well as companies could be forced to increase the final product price to make up for the increased fees.