ARM recently announced it is going to make changes to its licensing policy that underpins most of the consumer tech industry. Now, thanks to a Financial Times report, we have an idea of how this new ARM licensing model is going to work or dare we say change the way the consumer electronics industry works. Let’s understand.
The key change is that ARM will charge royalties from device manufacturers (based on the value of the device) and not the chip makers (based on the value of the chip) as it does currently. Since a device costs more than a single chip, ARM earns more. That’s the idea to boost its revenue ahead of its forthcoming IPO.
Let’s break it down even further.
ARM licensing change: How it impacts the chip and device makers
Before, ARM used to license blueprints of the chip design to chip makers and charge a license fee as well as recurrent royalties for every new chip sold.
Now, it charges this…
