Apple’s Exceptionally Low Patent Fees to ARM: A Strategic Financial Play

November 30, 2023 – In the rapidly evolving world of technology, Apple’s strategic maneuvers in managing intellectual property costs have drawn significant attention. A recent report highlights the remarkably low patent fees Apple pays to ARM, a leader in semiconductor technology. Apple, a major ARM client, is noted for paying less than 30 cents per chip in patent fees, irrespective of the chip’s complexity or number of cores. This fee, roughly equivalent to 2 Yuan, stands out in the competitive landscape of smartphone chip manufacturers.

The current licensing agreement between Apple and ARM, established in September, is set to extend beyond 2040. Despite this long-term agreement, there are indications that ARM is seeking to renegotiate these terms, possibly to reflect the evolving market dynamics and the value of its intellectual property.

Significantly, in early September, SoftBank arranged for several tech giants, including Apple, NVIDIA, and Intel, to be strategic investors in ARM’s U.S. IPO. Other stakeholders in this venture include Samsung, AMD, and Google, each subscribing to a portion of the company’s stock. This diversification of investment highlights ARM’s critical role in the global tech ecosystem.

Apple and NVIDIA, both major clients of ARM, find themselves in a unique position. Their investments and low patent fees reflect a complex interplay between maintaining competitive advantages and fostering collaborative relationships within the industry. This strategy not only impacts their direct financials but also shapes the broader dynamics of innovation and technology development.

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