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SoftBank's Arm may raise processor authorization fees or set itself on fire, and big customers can look for alternatives.

2025-04-04 Update From: SLTechnology News&Howtos shulou NAV: SLTechnology News&Howtos > IT Information >

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Shulou(Shulou.com)11/24 Report--

According to news in the morning of March 27, Beijing time, in order to achieve the listing goal, son, founder of Softbank Corp. Group, recently decided to raise the price of chip design solutions purchased by corporate customers of his chip design company ARM. Relying on price increases to boost ARM's revenue only looks beautiful, but it may hurt, because some of ARM's chip giant customers can develop and design their own solutions.

ARM has many chipmaker customers around the world, including giants like Qualcomm, who have licensed low-power processor designs from ARM. These customers may not be able to accept the increased licensing fees.

Objectively speaking, ARM hopes that the plan to adjust corporate licensing fees can be understood. Initially, the company's business model was to charge corporate customers who use processor designs a small licensing fee, equivalent to about 2 per cent of the final processor price.

In the future, if the license fee can be calculated and charged according to the final price of the electronic device using the processor, ARM's license fee revenue will increase significantly. For example, the current price of high-end smartphones is more than $2000, and the corresponding licensing fees will be very high.

ARM's design has become some kind of standard for mobile device processors around the world, and almost all smartphones use it. The company's processors have very high energy efficiency indicators, using less battery power and lower heat generation. More importantly, the cost is affordable for the ultimate processor manufacturer.

The attractive price keeps ARM design in the leading position in the industry, but the market situation has changed. Many electronic devices have used RISC-V processors based on open source chip design architecture.

In the global smartphone processor supply chain, ARM has been working hard for many years and has a solid foundation, while open source processors lack the necessary technical support from manufacturers. In this situation, if ARM raises the licensing fee, the market dominance will lead to a substantial increase in revenue.

But on the other hand, raising prices for deep-pocketed smartphone makers could also hurt ARM itself. If the licensing fee is too high, these vendors may abandon ARM and invest in alternative processor designs.

Softbank Corp. Group has high hopes for the listing of ARM. Last year, it was reported that Softbank Corp. Group hoped to list ARM at a valuation of US $60 billion, but now the global semiconductor industry has entered a downturn, and ARM may be valued at less than US $34 billion based on the average price-to-earnings ratio of listed companies in the semiconductor industry.

Before listing, Softbank Corp. Group and Masayoshi son may indeed have a way to "stimulate" ARM's business, but from the perspective of long-term risks in the future, it is still a challenge to find investment institutions that are willing to hold shares in ARM for a long time.

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