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"I wonder how much the customers are prepared to pay proportionally for improvements in the technology."Those figures ae presumably $US, but still not startling.
The other thing is that many of ARM's customers would be established clients, so would be paying royalties only and not the licence fees. BrainChip have an open order book.
ARM licence fees ten years ago:
https://www.anandtech.com/show/7112/the-arm-diaries-part-1-how-arms-business-model-works/2#:~:text=The upfront fee generally ranges from $1M -,2% of the selling price of the chip.
The ARM Diaries, Part 1: How ARM’s Business Model Works
by Anand Lal Shimpion June 28, 2013 12:06 AM EST
The upfront fee generally ranges from $1M - $10M, although there are options lower or higher than that (I’ll get to that shortly). The royalty is on a per chip basis. Every chip that contains ARM IP has a royalty associated with it. The royalty is typically 1 - 2% of the selling price of the chip.
https://www.neowin.net/news/arm-reportedly-hiking-licensing-fees-of-its-chips-by-four-times-for-some-customers/
Arm reportedly hiking licensing fees of its chips by four times for some customers
Rajesh Pandey @ePandu · Jul 16, 2020 02:58 EDT ·
A couple of days after reports first emerged of SoftBank looking to sell Arm Holdings partially or do a public offering, a new report sheds light on how Arm has increased the licensing fees for some of its customers. The Reuters report claims that in recent negotiations, Arm representatives have hiked license costs by as much as four times for some customers. The move has led some of Arm's licensees to consider non-Arm alternatives.
“It’s created a lot of tension for us,” one Arm licensee told Reuters, saying the hikes seemed out of proportion to the improvements in the technology.
Arm's instruction set and CPU designs play a major role in almost every consumer product out there today, including smartphones, laptops, tablets, wearables, and more. The importance of Arm has only increased over the last decade with the rising popularity of smartphones. They are going to become even more important in the future as Apple has made its intention clear of switching its Mac lineup to custom Arm-based cores as they will offer better performance and efficiency to consumers. Some companies like Qualcomm license the instruction set as well as CPU core designs from Arm and pay a royalty on the latter. Others like Apple only pay the licensing fees for the instruction set and design their own CPU cores.
Arm already rakes in millions of dollars every year from licensing fees and billions of dollars in royalty fees from chips designed by it. A steep rise in Arm licensing fees could negatively impact consumers as well as companies could be forced to increase the final product price to make up for the increased fees.
I wonder how much the customers are prepared to pay proportionally for improvements in the technology.
Indeed, and that is a very exciting question and depends directly on the skills of management, because for me as a customer for refrigerators I would really like to pay a higher price if the year to year energy consumption of this maschine would save me money over the lifetime of the maschine. It is also more important on everyday use like dishwashers and washing maschines.
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