Arm, one of the largest semiconductor design asset (IP) corporations in the world, is pursuing a long-term strategy to increase royalties by up to 300% while discussing the option of designing its own semiconductors, Reuters reported on the 14th.
Reuters noted that this information was confirmed through testimonies and documents from the intellectual property infringement lawsuit that Arm filed against the American semiconductor manufacturer Qualcomm.
Acquired by Japan's SoftBank, led by Masayoshi Son, in 2016, Arm dominates over 90% of the IP market needed for the design and development of mobile application processors (AP) used in smartphones. Most mobile APs produced by Samsung Electronics, Apple, and Qualcomm utilize Arm's IP.
Reuters pointed out that while Arm has played a key role in the rise of semiconductors for smartphones and data centers, its revenue for the fiscal year 2024 is $3.23 billion (approximately 4.72 trillion won), which is still modest compared to its formidable clients.
Reuters explained that SoftBank Chairman Son and Arm CEO Rene Haas have decided to change this situation through a long-term strategy. Arm's plan, known as the "Picasso" project, dates back at least to 2019, and according to executive testimonies, it aimed to increase annual smartphone-related revenue by about $1 billion over a span of 10 years.
Reports suggest that Arm planned to partially achieve this goal by raising royalties on semiconductor designs using the latest computing architecture, "Armv9."
It has also been reported that discussions regarding the design of its own chips took place. Prakash Sangam, founder of the Tantra analyst firm who attended the trial, said, "It was news to me that Arm is considering (own chip production)," adding that it would send shivers down the spines of its clients.
The CEO of HASSBIO reportedly expressed confidence in a conversation with other Arm executives that if Arm launches its own chips, it could compete with its clients.
Reuters also reported that in October 2022, Chairman Son and CEO Haas met with executives from Samsung Electronics, during which Son informed them that the licenses between Arm and Qualcomm would expire in 2025.
According to reports, subsequently, Samsung expressed concerns about Qualcomm's chip supply capability as CEO Cristiano Amon testified. Amon assured Samsung that Qualcomm would hold Arm licenses until 2033, and subsequently, Samsung reduced its three-year chip supply contract with Qualcomm to two years due to uncertainty from this matter.