Apple may be one of Arm’s largest customers, but the computer manufacturer is also the one that pays the least to be able to use the semiconductor designer’s technologies – although they are essential to Apple products.
Apple is known for squeezing its suppliers and subcontractors to obtain the most advantageous prices. This is the case with Arm, whose technology serves as the basis for the various chips in the iPhone, iPad, Mac, Apple Watch and all the manufacturer’s other products. According to the site The Information, the apple firm pays Arm “ less than 30 cents per device ” sold.
Arms empty for Arm
This is simply the lowest fee among Arm customers. Apple accounts for less than 5% of the British company’s turnover. In 2017, Masayoshi Son, boss of SoftBank (owner of Arm) reportedly deplored to his troops that Apple was paying more for the piece of plastic used to protect the iPhone screen than for its technologies…
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He would also have requested, to no avail, higher royalties from Tim Cook. But at the time, Apple having signed a contract until 2028, there was no reason to revise the fee upwards. The two companies have continued their negotiations since, but the financial terms have not changed, to the great benefit of Apple. Last September, they signed an extension of their agreement until 2040… After all, it is not for nothing that Apple is one of the most profitable companies on the planet.
The Information also notes that Apple is exploring the possibility of switching to a new architecture, in this case RISC-V. Free of rights and open, it is still very far from being as efficient as the ARM architecture. But Apple doesn’t want to keep all its eggs in one basket.