back to article How Arm aims to squeeze device makers for cash rather than pocket pennies for cores

The rumors and whispering of Arm substantially hiking its fees, right as an IPO looms, just won't go away. The Softbank-owned British processor designer has reportedly approached several of its largest customers about increasing fees for its blueprints, and charging device makers directly rather than licensing designs to …

  1. Crypto Monad Silver badge

    I can see how this will work out...

    CPU designers start to charge based on a slice of the total device value, not the CPU chip value.

    4G/5G radio designers start to charge based on a slice of the total device value, not the radio chipset value.

    Screen and battery designers start to charge based on a slice of the total device value, not the screen or battery value.

    Soon there isn't going to be any value left in the phone at all.

    1. Headley_Grange Silver badge

      Re: I can see how this will work out...

      I guess it also means that Gordon Ramsey would pay a lot more for potatoes than I do.

      1. Contrex

        Re: I can see how this will work out...

        But what about how much Gordon Ramsay pays?

        1. Anonymous Coward
          Anonymous Coward

          Re: I can see how this will work out...

          At least he pays for them, unlike Antony Worrall Thompson.

    2. James Anderson

      Re: I can see how this will work out...

      So how much are they planning to charge for the ARM chips used in Maseratis Lamborghinis and BMWs.

      1. Roland6 Silver badge

        Re: I can see how this will work out...

        Also how much are they planning to charge those clod providers who build their own systems and hence the final ‘product’ doesn’t have a price tag…

      2. John Brown (no body) Silver badge

        Re: I can see how this will work out...

        "So how much are they planning to charge for the ARM chips used in Maseratis Lamborghinis and BMWs."

        Excellent point. I foresee lots of court cases attempting to not only define exactly what the "end user device" is but is the "value" what the end user pays or what the OEM builds it for? Retail prices vary from country to country as well as over time. If a phone is discounted does Arm get a proportionally lower royalty?

        Buy Samsung phones and tablets. Comes with a FREE Arm processor!![*]

        Note, the CPU is not part of the device and if you insist we do have models available with no pre-fitted CPU at EXACTLY the same price, just to prove that the CPU really is FREE!

        1. Justthefacts Silver badge

          Re: I can see how this will work out...

          You know that Qualcomm charges a royalty of a % of end-user device price, just for the patents in 3G/4G/5G, right? Thats their pricing model, and has been for near 30 years. That’s not the chips, *all* manufacturers pay that whether they use Q chips or not, it’s the IP embedded within the 3G/4G/5G standard. And it’s not nothing. It works out about $15+ per flagship phone. ARM are deliberately cut-and-pasting Qualcomms royalty terms, to minimise the chance of legal challenge.

          This entire thing is Q having a pricing tantrum that they want *more*, pot calling kettle black, and persuading people to hate on ARM instead. And a bunch of gullible people outside the industry are falling for it.

    3. An_Old_Dog Silver badge

      Licencing Per-Device

      If this approach becomes widespread, end-users will not be able to purchase CPU chips, since they won't be able to "prove" to the CPU makers what use they would be put to. Thus, the end of socketed CPUs: they will be bonded onto the motherboard, so a licenced-for-a-motherboard CPU isn't removed and installed into some "higher-value" product for which the CPU maker did not get their full desired value-cut out of.

      This will be bad, bad, bad for hardware hobbyists, and economically-disadvantageous for consumers. (When your CPU dies, you will have to buy a replacement motherboard, too.)

      RISC-V, here we come! (Now we will need some sort of open-source accelerated video chippery.)

      1. Sailingfree

        Re: Licencing Per-Device

        I take your point about the effect on obtaining components, but in my experience all the boards I’ve come across with ARM processors have the chip firmly soldered to the board, are there actually any socketed ARM processors.

        1. Old Used Programmer

          Re: Licencing Per-Device

          Sort of...you can buy Raspberry Pi RP2040 dual Cortex-M0 microcontroller modules. They go for $1 each. A full RP Pico is $4 to $6 per board.

          This whole pricing scheme might be pretty favorable to Pis. The retail list price for the most expensive current model is $75 (Pi4B-8GB) with the Pi-400 running a close second at $70.

          1. doublelayer Silver badge

            Re: Licencing Per-Device

            Those modules aren't standardized. You could build a socket into which you can place an RP2040, but it would only let you swap in a different RP2040 at the moment. Other chips could be designed with the same set of pins, but they'd have to make sure their chip had the same peripherals as the RP2040 or it wouldn't work. Since it's not a standardized socket, I'm not sure it would count for their complaint.

      2. doublelayer Silver badge

        Re: Licencing Per-Device

        This only applies if Intel and AMD decide to adopt the same policy. It's not inconceivable that an ARM chip could be socketted, and I'm sure it's been done at some point in the past, but none of the boards with ARM processors in common use have that setup. I've not seen a single SBC, let alone phone, tablet, or device using an ARM microcontroller somewhere, that has it socketted like that. The closest that I've seen are SOMs like the Raspberry Pi's Compute Module. That wouldn't be prohibited by this design, since the SOM maker sells those modules directly and doesn't necessarily make the hardware they're installed in.

        1. Neil Barnes Silver badge
          Holmes

          Re: Licencing Per-Device

          I wonder if they're thinking about following this policy on low-level processors/controllers? That's going to upset a *lot* of people; there are illions upon illions of just-smart-enough with just-enough-pins and just-enough-peripherals out there. Managing that would be a complete nightmare.

          As a previous commenter said: brace for RISC-V.

          Time to look more seriously at RISC-V dev boards.

          1. doublelayer Silver badge

            Re: Licencing Per-Device

            I would think that they would recognize how much they'd lose if they did that to the people using microcontrollers. If I worked at ARM and was pushing this policy, I would have applied it to the Cortex A series but would leave the Cortex M one alone. It's a lot harder to change out the higher performance cores that have been optimized whereas swapping to a new ISA for a cheap microcontroller that doesn't have to be too fast or efficient is easier, especially because manufacturers can continue to use old chips that are covered by the previous license while they test on the new ones. This is one reason why I'm not sure we have all the details, including a possibility that they're not going to do all the things the rumor suggests they might. Then again, there are many choices I would make based on a programmer's understanding of what would make money which professional managers don't do, so just because something seems stupid to me doesn't mean they won't still do it.

      3. cyberdemon Silver badge
        Devil

        Re: RISC-V, here we come!

        Could this be a hint of an evil strategy by ARM's new owners?

        In the short term, they make a pile of cash with this new licensing model. In the long-term, they let the rot set in, and sell it while they get behind RISC-V.

        Why the hell did we let ARM be sold off in the first place??

        Oh, it was the Tories. Apparently Vince Cable was about to block the sale, but then Sajid Javid replaced him as business secretary, and waved it through.

        1. Proton_badger

          Re: RISC-V, here we come!

          > In the short term, they make a pile of cash with this new licensing model. In the long-term, they let the rot set in, and sell it while they get behind RISC-V.

          It's just the typical short-term profit focus with no regard for the future you always see when the bean counters take charge.

    4. well meaning but ultimately self defeating

      Re: I can see how this will work out...

      Strongly disagree - I reckon ARM must understand they have alienated some of their largest customers who have begun deploying RISC-V in lower end designs and slowly pushing it up to higher complexity designs. The writing is on the wall and they know they have to maximise the value they extract before it's too late. ARM's strength historically was that it was always Switzerland - the neutral player in the middle that everyone could work with. Post the overpriced acquisition and the Softbank funded spending spree they needed to deliver more revenue; initially to justify the investment and now more desperately to recover MS's reputation with a successful IPO and subsequent growth before the mirage disappears and the world moves all in on RISC-V. As part of their response here they started getting greedy. They moved from emulating Switzerland as a strategy to emulating Russia with an increasing scorched earth policy on their customers and once partners. Clock's ticking and they need to earn as much money as possible before the capital being invested in RISC-V and the associated till chain materialises as an existential threat.

      Arm has shot itself in the foot and it's beginning to look like gangrene had set in.

    5. david 12 Silver badge

      Re: I can see how this will work out...

      Soon there isn't going to be any value left in the phone at all.

      This is what happened in the movie business years ago. Everybody takes cash or a cut of gross, because net profit is always zero.

  2. 3arn0wl

    Let's see how strong Arm's ARM is... Will they have much power to strong arm?

    "Arm intends to alter its royalty program, ceasing to charge chipmakers royalties for using its designs based on a chip's value, and instead charge device makers based on the value of the device, the report said.

    "Arm is going to customers and saying 'We would like to get paid more money for broadly the same thing', a former senior employee who left the company last year told FT."

    Two quotes from the article in the Financial Times that broke the story.

    So it seems that Qualcomm were right about what Arm are intending to do.

    Well... as the ArsTechnica article suggests, this is RISC-V's moment!

    If it's Arm's intention to squeeze design companies [out of business?], as the first quote suggests, then surely those companies are going to look to alternative ISAs... So will they start designing RISC-V chips in stead?

    And will OEMs, in the face of an 'ARM Tax', start using SoC like the TH1520 - which, as we know, can provide more than sufficient processing power for a phone or a netbook - in their kit in stead of ARM? ( It's not as if Arm's own designs are as good as the design company's alternatives, is it!?) The alternative is to pass on the tax to the consumer, and perhaps lose market share to cheaper RISC-V-based kit as a consequence.

    Maybe we're going to see RISC-V SoCs widely used sooner than anyone thought. And what happens come 2025, when the more powerful RISC-V chips with the Vector extension come out?

    1. eldakka
      Facepalm

      Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

      You missed the opportunity to use StrongARM!

      1. 3arn0wl
        Facepalm

        Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

        I thought I'd used it in the title. :/

        1. eldakka

          Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

          I did think that was where you were going, but since the name 'StrongARM' wasn't used but space-separated words, I wasn't sure whether you were alluding to StrongARM or came up with something strikingly similar - but nit identitcal 0 yourself, my bad.

    2. Mr Homeless Guy

      Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

      I think 2025 will be the year of Linux on the desktop!

      1. Anonymous Coward
        Anonymous Coward

        Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

        The Linux desktop is here to stay forever again ,..

    3. abend0c4 Silver badge

      Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

      From a technical point of view, it's not really about the ISA: I'm quite sure ARM will produce RISC-V chips if it's in its interests to do so. In any case, Android has never been entirely dependent on ARM - there were a lot of x86-based devices in the early days and Apple have managed to move reasonably seamlessly across a whole range of processor families. Everyone has alternatives.

      However, instruction sets are clearly an inertial barrier - you don't want to change your tooling unless you have to and you certainly wouldn't want to do it for each new product release - but the bottom line comes into play eventually, so it's a potentially very fine line that chip suppliers have to tread.

      Obviously, if a significant number of companies are making chips that are effectively drop-in replacements for each other you'd expect prices to come down, but while an open ISA can facilitate that, its not a given it will happen. The majority of the value is in the design of the chips themselves and there's nothing about RISC-V that requires the chip designs to be open. In fact, I'd expect to see chip designers being (even) more robust in patenting technical features of the implementation to fight commoditisation. In the end there aren't going to be that many companies with the ability to invest in the necessary design capacity to keep new generations of chips flowing to product manufacturers with the performance and reliability they will want and that will be the ultimate pricing floor.

    4. doublelayer Silver badge

      Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

      "So it seems that Qualcomm were right about what Arm are intending to do."

      This adds a bit more to suggest it's probably true, but it's not yet confirmed. Basically, it's another rumor that's effectively the same as the rumor Qualcomm alleged last year. If, for the sake of argument, Qualcomm made it up, then seeing it again from someone who could have just heard it from Qualcomm wouldn't confirm it. I don't have any reason to think that Qualcomm made it up from nothing; I used the unlikely statement to demonstrate that we couldn't disprove something as absolutely opposite as that.

      The ARM employee's statement, similarly, doesn't confirm that this change will come. It could be their complaint about what they see as a lack of technical development and would apply just as well if ARM intended to ask for a higher per-core price rather than changing the model this radically.

      These statements aren't to say that I think the rumors are false. I have no special knowledge that would confirm or refute the rumor. It's certainly possible and could generate more profit, so there's reason not to reject the rumor out of hand. Still, at the moment, it's a rumor, not a forgone conclusion.

      1. 3arn0wl

        Re: Let's see how strong Arm's ARM is... Will they have much power to strong arm?

        From the ArsTechnica article:

        'The report says, "MediaTek, Unisoc and Qualcomm, and multiple Chinese smartphone makers including Xiaomi and Oppo, are among the companies that have been made aware of the proposed change to pricing policy," '

        You're right to concede that it's not something that Qualcomm have made up. But this is more than a rumour. Obviously we are not privvy to the content of the letters to the companies mentioned above, so there is some speculation, but nevertheless it is (currently*) Arm's intent to change the way they do business.

        * I guess that they could change their minds in the face of industry backlash.

  3. Headley_Grange Silver badge

    Options for Much Silliness

    This could get fun. The device manufacturer could bill Arm monthly for the energy its chip uses and charge them by the byte for reads and writes (writes will be more expensive, obvs). The bus would become a toll-bus. Welcome to the age of the Engineer-Accountant.

    1. that one in the corner Silver badge

      Re: Options for Much Silliness

      At least that would prompt companies to write optimised code and get rid of some bloat.

      1. elsergiovolador Silver badge

        Re: Options for Much Silliness

        *sweats in Java*

    2. pimppetgaeghsr

      Re: Options for Much Silliness

      Well their CEO is a salesman

  4. b0llchit Silver badge
    Facepalm

    face(arm) palm

    So, the Cortex series they want a piece of the device revenue where they are used. The Cortex M series is used 10..100 times more often. Many embedded applications use the M series. Do they also want a device tax with these chips that I can buy at any component pusher for whatever purpose I like?

    Paying a different price for the same potato depending on what dish you make and who is making it? Sounds like an assured way to irrelevance.

    1. Anonymous Coward
      Anonymous Coward

      Re: face(arm) palm

      Shh. If Oracle get wind of this, they'll start charging by percentage of your firm's revenue, rather than the number of CPU cores in your server.

      They already charge on the number of CPU cores in a box, regardless of whether those cores are running Oracle or not.

      1. b0llchit Silver badge
        Mushroom

        Re: face(arm) palm

        No need to shh anyone here...

        Oracle already adapts the price of licenses to the level practically extractable from the licensees and then some through using its vast army of lawyers to do "audits". This is hugely profitable because everybody always fails the audit. Or do you want to defend your audit through the courts, which is more expensive.

    2. Anonymous Coward
      Anonymous Coward

      This is a footgun move for ARM

      This is a footgun move if I have ever seen one.

      My company uses Cortex-M processors from ST in its industrial products (and I see lots of them in equipment that I buy). The day that ARM forces ST to try this shit with us is the day we switch to a different MCU architecture entirely. I'm certain that ST will be on our side with this; they won't want to be any part of such nonsense any more than we do. Expect ST to introduce a parallel series of ARM-less MCUs to keep their market share, especially if ARM goes ahead with this bullshit. Realistically, however, they have to set this in motion anyway now that ARM have revealed their intentions; no walk-back or denial will rebuild the trust they've demolished. ARM isn't the only game in town.

      Anon because let's not cause trouble for my employer or foul up its vendor relations, eh?

      1. Woodnag

        No ARM done

        Arm is betting that the core is locked in to its main markets. Probably true for industrial, but the new licensing will affect new MCU designs, not existing ones. So you'll keep using the same MCU, and ST will consider moving to a different core for its next family.

        1. Anonymous Coward
          Anonymous Coward

          Re: No ARM done

          Short term gain, medium term suicide. If they do this, they're dead in 5-7 years.

          Only smartphones are relatively locked in, and that's entirely because of commodity software.

          Industrial stuff like cars and machinery contracts with a 5-10 year guaranteed availability - same chip for the whole run.

          First two years are generally development, then 3-8 years of sales. The replacement project starts about two years before end-of-life, choosing a new chip for the next cycle.

          If they pull this kind of thing on industrial users, then the replacement project will use something else because the cost is unjustifiable.

          So Arm's sales would look fine for a couple of years, then cease as the replacement launches.

          Once they leave, they won't come back because Arm will have proven themselves an unreliable architecture.

          1. John Brown (no body) Silver badge

            Re: No ARM done

            "Short term gain, medium term suicide. If they do this, they're dead in 5-7 years."

            Why would they care? If the IPO is successful, the people that count will have made their billions and be out of it by then.

            1. Anonymous Coward
              Anonymous Coward

              Re: No ARM done

              Only if the IPO investors are idiots.

              Oh. Yeah, I see your point.

          2. Justthefacts Silver badge

            Re: No ARM done

            “the cost is unjustifiable”

            You understand that RISCV is the much more expensive option, right? And likely to be so for at least the next two or three decades. Your choice (at similar performance) is between an ARM chip @ $5, on which you have to pay $0.10 royalty to ARM. Or a RISCV for which you have to pay $10-15. If you want to pay twice as much, just to make your political point, you can do so as a hobbyist. But not many companies will.

            The reason for RISCV being more expensive is quite simple and quite well- known in the industry. Simply: ARM cores have invested billions co-optimising with TSMC, UMC and Samsung silicon process, and achieve 93%+ yield on leading-edge process. RISCV you are on your own, and achieve at best 70% yield…..and companies like SiFive are struggling to go above 30% yield. Most RISCV companies never achieve more than a half dozen working chips out of potentially thousands on a wafer. All the 30% scrap chips (best case) or 99% scrap (average RISCV company) goes straight on the price of the chip. 99% scrap means your $10 chip actually costs $1000. That’s why all the RISCV dev boards are a) not available in volume manufacture b) much more expensive.

            You can of course do a “proof of concept” RISCV on 28nm or something old, and “it works fine”. But that’s as far as it is ever going. Yes, I am well aware that “some cheap microcontrollers don’t need leading edge”. Indeed, and the market is saturated with good solutions for that, available at 3-10 cent unit cost, 8 or 16bit, and aren’t ARM anyway. You are hitting a strawman market niche that simply doesn’t exist.

            1. Anonymous Coward
              Anonymous Coward

              Re: No ARM done

              Tell me where you're getting that royalty fee from, because it definitely isn't TFA.

              TFA says "based on price of final product". 0.05% of a $1000 phone is $0.50.

              Of a $50,000 car is $25, and of a $100,000 machine tool is $50. And there's a lot of cores in there.

              Car manufacturers try to shave tenths of a cent. Re-routing a cable bundle to shave 15mm off the length is worth doing.

              And RISC-V isn't the only alternative. At the microcontroller end the popular ones are probably MIPS, PIC and AVR32, and the performance end has amd64 and a few others.

              1. Justthefacts Silver badge

                Re: No ARM done

                I’m well aware of the appalling and self-destructive price behaviour of the automakers. I’ve seen it up close.

                #1 As I said in my OP, at the low-end, microcontrollers are mostly 8 and 16 bit; PIC etc. not ARM. ARM is a strawman: whatever their pricing policy is, affects that market not at all.

                #2 It’s just stupidity and bad business to let the price of 100 off critical components that *sum to* $25, determine your ability to ship a $100k car or machine tool. There is no parts shortage, and never has been. All there is, is unwillingness to pay market rate. And VW basically destroyed their entire business (outside their captive EU market) in just three years, through poor management. Ok. But why is it anyone else’s problem? Chinese automakers like BYO have had no such supply problems, and routinely ship vehicles with a much higher % of electronics.

                #3 Nor, in fact, do I in the U.K. have any problem whatsoever in sourcing microcontrollers of any SKU I need for my business, in any quantities I need (typically 5k-50k units every couple of weeks). BTW, it’s mandatory in the modern world to speak the right languages, know the right people, and treat the relationship with respect. If you’re just looking on Digikey or going via a “distributor”, of course you’re SOL.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: No ARM done

                  So you're one of the ones who outbid us?

                  "Market rate" went through the roof because of the part shortage. Economics 101 and all that.

                  We've had to pay ten to twenty times "list" price for some parts - taking a short-term loss to keep a longer-term contract.

                  Many of those high prices were for the last few tapes that will ever exist, because several chip makers took the "opportunity" to terminate production.

                  We've redesigned various boards repeatedly to use alternative chips, sometimes never even shipping the new design because "quantity in six months at $price" turned out to be untrue - because someone like you outbid us by enough for the supplier to break contract.

                  I don't blame you for having margins large enough to take that hit, though I am surprised that you don't appear to understand why you had to pay so much.

    3. DJV Silver badge

      Re: face(arm) palm

      "Paying a different price for the same potato depending on what dish you make and who is making it?"

      Absolutely! The same stupidity happened in the UK in the 1970s when a dual rate of VAT came in. Luxury goods were taxed at 12.5% while everything else was 8% (yeah, it was that low back then!).

      This meant that the electronic component carried a different rate of tax depending upon what it was going to be used in. Of course, the governmental idiots who'd first decided that it was a good idea to have two rates didn't have a proper solution as the potential problems hadn't ever troubled their tiny, imbecilic minds.

      1. Anonymous Coward
        Anonymous Coward

        Re: face(arm) palm

        Actually between 1974 and 1976 the "luxury" VAT rate was raised to 25%

        1. Neil Barnes Silver badge

          Re: face(arm) palm

          Yes, and chips were basic rate. But sockets to put them in were bloody luxuries...

          At least it taught me how to desolder components as well as solder them safely.

          Uphill, in the snow, both ways...

  5. oreosRnice

    This again?

    Didn't Qualcomm or some other company try something similar to this? Didn't they got sued into the ground and never spoke of it again.

    While yes ARM plays a large part in what makes devices today what they are. That doesn't mean they suddenly deserve a percentage of end device profits. Just charge more and claim it on inflation or whatever the new hot word/phrase is.

    1. DS999 Silver badge

      Re: This again?

      Qualcomm does this successfully, since the agreements for FRAND patents don't (or at least didn't, not sure if it is still the case for the nascent 6G effort) explicitly bar charging for patents like that. Apple sued over it but eventually the two sides settled.

      We may see Apple v Qualcomm 2.0 once they start using their own own cellular modem instead of Qualcomm's, and it would probably be worth Apple's while to take that all the way to the Supreme Court and get a judicial opinion over whether charging that way meets the "non-discriminatory" part of "FRAND". They couldn't take it that far last time because Qualcomm always held the ace in the hole of refusing to sell modem chips to Apple. Once Apple no longer needs them, we will see that issue finally decided. Many, many years from now, of course, given how slow those types of lawsuits proceed through the courts and appeals.

      Even if Apple won that case that would only affect how companies can charge for FRAND patents. It wouldn't affect ARM's ability to do that at all. ARM can't change the terms of existing licenses (and since Apple's ARM license is perpetual they are fine, that's why reports say they are not involved in these discussions because it won't affect them) but all licenses except Apple's are for a certain term and have to be renewed. ARM can ask for any royalty schedule they want when it is renewed, but whether anyone accepts that versus going with an alternative is another matter.

      1. Woodnag

        ARM can't change the terms of existing licenses

        No. But they can refuse to license newer cores or other IP without a new contract which renegotiates everything.

        1. DS999 Silver badge

          Re: ARM can't change the terms of existing licenses

          Depends on the terms of the agreement. That's true for a core license which is specific to a given core. We don't know much about how their architectural licenses are written, but the Qualcomm dispute has revealed that they are all separately negotiated rather than a standard template so ARM may have more ability to increase prices on some licensees than they do on others.

    2. John Brown (no body) Silver badge

      Re: This again?

      "That doesn't mean they suddenly deserve a percentage of end device profits."

      It all sounds a bit like the pick and shovel manufactures claiming a percentage for the successful players in the gold rush(s).

  6. skwdenyer

    This seems a sure-fire way to kill the golden goose.

    It will also potentially kill off free software updates - if you're a device maker, there's going to be a strong temptation to move to a services / software revenue base, which means selling the hardware more cheaply but charging for necessary software updates.

    One has to hope this is just noise intended to talk up the values of the shares.

  7. Brewster's Angle Grinder Silver badge

    The engineers have left the C-suite.

    Arm have stopped being a technology company...

    ...and started being a money company.

    Bad luck to another bunch of cash counters!

  8. mark l 2 Silver badge

    Are ARM trying to push the adoption of RISC V ?

    For anyone other than Apple or Samsung who make phones, the profits are already pretty slim. ARM wanting a further cut of their profits will probably cause some of the smaller players to either exit the phone market altogether or seriously look at switching to RISC V, neither of which helps ARM make more money.

    With Google announcing last year they intend to make RISC V a tier one platform for Android, I predict we will see RISC V based phones on the market in the next few years, and this could be accelerated if ARM go ahead with their proposed licensing changes.

    It might even see Intel throw their hat back into the ring and release a new Atom x86 SOC for those who want to move away from ARM licensing terms.

  9. Howard Sway Silver badge

    If you use our product, we now own a share of your company and demand a share of your profits

    That's what this business model is, and it's a hugely anti-competitive form of extractive rentier capitalism.

    Imagine it being embraced by everyone. Use Excel spreadsheets to run your finances? Well, the program's now free, but Microsoft now expect a % of every sale you make. Did you view the spreadsheet on a Dell monitor? Fork a share over to Uncle Michael. Did you power the monitor with electricity from Energo Corp? Pay up or power off!

    1. Mr Homeless Guy

      Re: If you use our product, we now own a share of your company and demand a share of your profits

      It'll be the same shakedown crap on software and hardware, the more successful you are the more you pay.

      It does rather crush innovation and startup growth. Not really what we need from chip designers.

  10. A Non e-mouse Silver badge
    Happy

    I wonder how much ARM would get in royalties on a Raspberry Pi Pico

    1. David 132 Silver badge
      Happy

      You’ve given me an idea.

      “ARM, we want to use your chips in our small, useless proprietary breakout PCB that will have a retail price of about $5. So you’ll only be charging us pennies for the chip design, right?

      Coincidentally, our company also sells an extremely high-end smartphone chassis that just so happens to accept that small PCB as a plug-in core module…”

      1. Neil Barnes Silver badge
        Happy

        But the companies owning both are wholly owned subsidiaries of our real company.

  11. Graham Dawson Silver badge
    Coat

    Company with license to print money decides it wants even more.

  12. Mage Silver badge
    Devil

    Qualcomm

    Arm's revised license model would see the company charge based on the value of the end device — a smartphone or tablet, for example — rather than the value of the chips based on its designs.

    That's greed, AKA double dipping in some cases. It needs to be banned worldwide.

    1. pimppetgaeghsr

      Re: Qualcomm

      I wonder if it is to do with the fact that ARM doesn't make the best ARM cores anymore. Apple showed the world what vertical integration can do and Nuvia/Qualcomm showed the appetite to move away from ARMs constantly late designs. Seems defensive that they want to collect their pound of flesh when the inevitable happens.

  13. Anonymous Coward
    Anonymous Coward

    I remember being told of how USB took off. IEEE 1374 "Firewire" was seen as being the new connectivity solution for PCs an consumer electronics - however when they came to set the royalties one of the memebrs of the patent pool (ok, it was Apple) were adament on their demand for a royalty "per port" and at a higher prce than potetntail licensees wanted to pay. As a result people looked for an alternative and concluded that USB 1.0 while nowhere near as preformant as firewire was "good enough" for most uses and had a "per device" royalty substantially lower than the firewire royalty for a single port. So that's why you see USB every now and firewire (virtually) nowhere. ARM could be heading in the same direction ... RISCV is a "good enough" alternative for many uses so people may start to swap out ARM for RISCV.

    1. ecofeco Silver badge

      This. ^^^

    2. Wu Ming

      My interpretation instead is Apple don't wanted a superior performing port available in everyone's hardware. Also because catering everyone means slicing it into so many sub-sets of cheaper specs down to ridiculousness. Aka "USB-C ports that are USB4 Version 2.0, USB4 Version 1.0, USB 3.2 Gen 2x2, USB 3.2 Gen 2, USB 3.2 Gen 1, or USB 2.0, plus some will opt for Intel Thunderbolt certification". Lightning is Lightning. Fireware was Fireware.

      1. Dan 55 Silver badge

        The only people who are responsible for USB's crazy naming scheme and connectors like Micro-AB are the USB consortium. Nobody forced them to rename protocols. Twice... or is it three times now?

    3. pimppetgaeghsr

      You'll see a lot of naysayers come to say how RISC-V is no viable alternative at ARM, seems to be the old guard in ARM likely who are sipping the koolaid and spreading such FUD online. As much as the maturity of the arm ecosystem is concerned customers don't really like being shown such malicious contempt. The time for greed in the market is long gone. ARM can't deliver the performance it thinks anymore as Apple and Nuvia have shown. So it makes sense that ARM try and double dip now.

      Most of ARMs chips don't come from performant chips either, it's your deeply embedded washing machine controller, or switches where the volume is gained. If they have only servers and phones to rely on, well that is not a massive growth market.

  14. Jemma

    We find..

    Our lack of cash disturbing..

  15. cdegroot

    Softbank runs company into the ground. Film at 11.

    I do wonder how much regret Apple now has. RISC-V should be pretty viable by now but they’re locked into Arm everywhere for a decade (that seems to be roughly the pace that Apple switches processor architecture).

    1. Anonymous Coward
      Anonymous Coward

      I don't know if this is sharing anything particularly new but I met an ARM employee about, oh, a year ago. That person's opinion of Softbank was not complementary, and I don't mean my-boss-is-a-jerk sense. Tone was more criminally-squeezing-every-last-drop-of-value-we-hate-them-all. Posting anon just in case it causes grief for them, and anyway I don't have hard evidence. In other words, Pope still goes to mass regularly and bears poo in forests. Maybe more so.

    2. Proton_badger

      I don't think any regret as they can do what they want because of their architectural license. Apple have already dropped some of the older ARM features/cruft from their own designs and simplified few things - so it's quite possible their ARM designs will remain on par with those future high end RISC-V chips for performance/power.

      Having said that, they did have a job posting up a year or two ago for hiring a RISC-V guy, so they're probably doing the wise thing and keeping a close watch on it.

  16. elsergiovolador Silver badge

    Desperate arm

    Way to show desperation for cash before IPO...

  17. captain veg Silver badge

    Arm, meet shark

    Now jump.

    -A.

  18. J.G.Harston Silver badge

    "I make steel that I sell to car makers. Hey! Those car makers then sell their cars to customers! I wanna slice of that!"

  19. Steve Davies 3 Silver badge

    All it needs for this to die

    is for the likes of Samsung and Apple to [cough][cough] leak information that they were well along the way towards developing a RISC-V core for their SOC's.

    To lose those two customers could... no make that would be a death blow to the new ARM.

    OR?

    Could Apple, Samsung etc buy a large enough part of the IPO to get seats on the board and block this? Apple has been a shareholder in ARM before.

    1. M.V. Lipvig Silver badge

      Re: All it needs for this to die

      If Apple or Samsung bought their way to the board, they would block this - for Apple or Samsung. Everyone else, nope. Apple or Samsung would get cheaper parts, everyone else would be paying a slice to Apple or Samsung via ARM.

  20. Electronics'R'Us
    Holmes

    Device agreements?

    How that would work looks something like this, we're told: Arm would still license its processor designs to chipmakers, but under so-called development licenses that require the chips to only be used by manufacturers that have device agreements with Arm.

    Many ARM microcontrollers are sold (as parts) via distribution (as are a lot of other architectures); if the above is true, that would no longer be permitted.

    Example: I design test interface equipment, among other things. Some of them are using a Cortex M4 device and I have perhaps 4 of them made once the design is solid. Would I (or $COMPANY) need a device agreement? It certainly seems so. How much would be the royalties? This stuff is for internal company use (never sold).

    I realise Cortex M series might not be affected but the reputational damage from this would see me drop them.

    What about the cores in Xilinx (now AMD) FPGAs? The Ultrascale parts have quite a few (some M series, some A series). I can't see them paying this rent.

    Quite apart from the engineering nightmare, the administration of it becomes terrible.

    There are plenty of alternatives that will do the task; one reason I currently use ARM is that free toolchains are widely available and parts are reasonably easy to come by.

    When either of those is not true, when the interfaces get replaced a different family will be chosen as the codebase is abstract enough that only low level drivers would need to change.

    I don't know how many controllers as a percentage of sales are sold this way but as a revenue stream it would get stopped in its tracks.

  21. Johnb89

    This is what Qualcomm does (or at least did)

    IIRC Qualcomm used (and still does?) a very similar model at the time of 3G when they were dominant, where some of the price that Qualcomm charged was based on the value of the end device. Qualcomm licensees used to squeal loudly about it and made every effort to get away from Qualcomm wherever possible. This spurs competition.

    Every company's job is to make money. Charge too little and leave money on the table, charge too much and push customers to alternatives. This is the way it works, and I'm quite sure the people in the ARM exec offices understand this.

    1. GrendelsOtherArm

      Re: This is what Qualcomm does (or at least did)

      Arm's exec may well understand this, but Softbank's need to recoup some money in the short-term is more likely to be driving this initiative than the long-term success of Arm.

      I hope that anyone considering buying in at IPO understands the likely effect of this spur to competition.

    2. Proton_badger

      Re: This is what Qualcomm does (or at least did)

      Yeah, QC still charges a percentage of each device but only up to a certain ceiling. However, if you buy QC modems you ALSO have to buy a QC patent license. It is this double dipping many customers have been unhappy about.

    3. ecofeco Silver badge

      Re: This is what Qualcomm does (or at least did)

      I'm quite sure the people in the ARM exec offices understand this.

      What makes you so sure? Because El Reg is pretty much based on many, many C Suite boneheaded decisions and outright crime. There are literally thousands of example of the CxOs doing really stupid things right here.

    4. Dan 55 Silver badge

      Re: This is what Qualcomm does (or at least did)

      ARM's debt is now an albatross like Twitter's is. The act of buying a company for some stupid amount breaks that company's previously successful* business model.

      * In Twitter's case, small values of successful, but it did achieve a profit before the pandemic and was on course to return to profit.

  22. pimppetgaeghsr

    Didn't ARM already do this a few years ago or is this yet another price hike, or regurgitation of the same old news. The revenue model is certainly different for sure, and despite what ARM said, was accurate about how Qualcomm said they were charging the OEMs instead, not licensees.

    Let's not forget that Softbank paid a little over 50% the asking price for ARM at the time, where they had $1.4bn in revenue. Now ARM allegedly has $2.7bn in revenue, so barely double the revenue, a hiked license fee and declining licensees as they no longer need to hedge against NVIDIA acquiring ARM, then there is the ARM china debacle. So in this market I would wager Softbank is barely about to break on their ARM purchase, doesn't seem like they are going to cover all the other bad bets. Word on the street is though that Softbank will cash out a portion of employees RSUs at the $60bn market cap, as if to say to the market that they are worth that much. That is bound to be a very high P/E ratio whatever way you swing it.

    It seems the horse has already bolted and all there is left in ARM is useless middle-managers with a propensity for meetings who are all likely watery-eyed as they look at their mortage repayments in Cambridge once their mortages are up for renewal soon. I guess they need those cash out options and are tightly held by those golden handcuffs. Let's hope ARM doesn't trim more of the fat.

  23. Sparkus

    This is exactly what

    the RISC-V consortium needs. With the ease of which emulation and cross-compilers work together these days, there isn't much besides inertia that will keep users/makers on Arm in the face of missteps like this.

    1. Jason Bloomberg Silver badge
      Pint

      Re: This is exactly what

      Even as a RISC-V fanboy I have agreed with the general consensus that, while RISC-V may gain some limited traction, it's not yet in a position to compete wholesale with ARM, and is stuck in a chicken and egg situation unless something 'devalues' ARM.

      Well - "Thanks ARM".

  24. Kev99 Silver badge

    To me, Arm's plan makes as much sense as Goodyear charging for its tire based on which vehicle the tires will be mounted on. So if the tire is going on a DeTomaso P72 ($1.3 Million) the tire would cost $1,300 but if on a Mitsubishi Mirage ($17.6K) the tire would cost $176. And the consumers would say "Hello, Hankook".

  25. M.V. Lipvig Silver badge

    The way around this

    would be for companies to split. Core Manufacturing INC has a contract to sell 50 million phones to Apple Resellers INC for 100 dollars a handset. Apple Resellers INC then sells these phonrs on. As Apple Resellers INC is making no change, Core Manufacturing INC is making the end product.

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