According to The Information, Apple pays royalties to British chip architect Arm for less than 30 cents per chip. Apple licenses Arm’s underlying technology, which is used in the iPhone, iPad, Mac, Apple Watch, Apple TV, and HomePod.
Despite being one of Arm’s largest and most important customers, Apple accounts for less than 5% of annual revenue, with the company paying the least of any Arm smartphone chip customer. Apple pays a flat fee of less than 30 cents per chip used in its devices, regardless of the number of cores.
SoftBank owns Arm, and the company’s CEO gathered Arm executives in 2017 to explain why Apple pays more for the piece of plastic. This is more commonly used to protect the screens of new iPhones than to license Arm’s intellectual property. SoftBank’s attempts to renegotiate Arm’s deal with Apple in order to increase royalty rates were apparently futile.
While Apple is unlikely to cut ties with Arm, the company has apparently investigated the long-term possibility of using RISC-V, a competing open-source technology for its chips. Apple’s current licensing agreement with Arm was signed in September and “extends beyond 2040.” Still, the chip architect is said to have tried to renegotiate its financial terms on a regular basis.