The British chip designer recently informed several of its customers about a “significant change” in its business model, the newspaper said, citing several industry leaders and former employees.
Arm Ltd, owned by Japan’s SoftBank Group Corp, is trying to raise the prices of its chip designs to boost revenue ahead of an IPO in New York, the Financial Times reported on Thursday.
The British chip designer recently informed several of its customers about a “significant change” in its business model, the newspaper said, citing several industry leaders and former employees.
Arm intends to change its royalty program by stopping charging chipmakers royalties for using its designs based on the value of a chip and instead charging device makers based on the value of the device, the report said.
As a result of this change, Arm expects to generate several times more revenue for each design sold, since the average smartphone is worth far more than a single chip.
“Arm goes to clients and says, ‘We’d like to make more money for basically the same thing,'” a former executive who left the company last year told FT.
MediaTek Inc, Unisoc, Qualcomm Inc and several Chinese smartphone makers including Xiaomi Corp and Oppo are among the companies alerted to the proposed pricing policy changes, the report added.
Arm did not immediately respond to Reuters’ request for comment.
The company will likely aim to raise at least $8 billion from the expected blockbuster launch on the U.S. stock market this year, sources told Reuters earlier this month.
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