In 2017, Arm-parent SoftBank’s CEO explained to Arm executives that Apple pays more for the plastic that is used to protect the screens of new iPhones than it does to license Arm’s intellectual property. However, SoftBank‘s attempts to renegotiate Arm’s deal with Apple to increase royalty rates were unsuccessful.
How Apple is planning to replace Arm as a supplier
In September, Apple signed the current licensing agreement with Arm which “extends beyond 2040.” Yet, the chip architect has reportedly continued its attempts to renegotiate its financial terms. However, Apple is unlikely to sever its ties with Arm. Meanwhile, the tech giant is exploring the long-term possibility of using a competing open-source technology for its chips called RISC-V.
It is important to note the license-free RISC-V technology will require a decade or so of work for Apple before being a viable alternative. SoftBank CEO Masayoshi Son also wants Apple to pay Arm more, but the chip architect doesn’t have any leverage.
Earlier, Son said Apple CEO Tim Cook that Arm would be raising prices for all its major smartphone and chip customers. Meanwhile, Apple argued that the current contract between the companies will last through 2028.