The plans, originating under SoftBank’s ownership and discussed during a recent trial with Qualcomm, underscore Arm’s ambition to expand its revenue and market influence.
For decades, Arm has supplied chip designs and intellectual property to major companies like Apple, Qualcomm, and Microsoft, charging modest royalties for each chip manufactured using its architecture. Despite its pivotal role in powering billions of devices, Arm’s fiscal-year 2024 revenue of $3.23 billion pales compared to its customers’ earnings. Apple, for instance, generates more than 90 times that amount from its hardware products alone.
SoftBank CEO Masayoshi Son and Arm CEO Rene Haas are determined to bolster the company’s position. Internal documents and testimony from the Qualcomm trial revealed a long-term plan, codenamed “Picasso,” to raise per-chip royalties, particularly for Arm’s latest architecture, Armv9, and generate an additional $1 billion in annual smartphone revenue over the next decade.
A 2019 strategy document highlighted a proposed 300 per cent hike in royalty rates for certain ready-made chip design elements. However, large customers such as Apple and Qualcomm, capable of creating chips from scratch using Arm’s architecture, may bypass these increases. Qualcomm’s 2021 acquisition of Nuvia was noted as a step toward reducing its reliance on Arm’s pre-designed solutions.
Haas has also suggested a potential shift in Arm’s business model, advocating for the sale of complete chips or chiplets in addition to blueprints. During the trial, he downplayed the possibility of entering the chip-design market, framing it as part of long-term strategic discussions rather than an imminent move.
Arm’s evolving strategy has raised concerns among its customers. During a 2022 meeting with Samsung executives, SoftBank’s Son reportedly pointed out the impending expiration of Qualcomm’s Arm license in 2025, creating uncertainty around future supply agreements. Qualcomm CEO Cristiano Amon testified that the episode prompted Samsung to shorten a chip supply deal with Qualcomm from three years to two.
Meanwhile, Arm continues to expand its reach beyond smartphones into PC and data centre markets, a move that reflects its efforts to remain competitive in a rapidly evolving industry.
