Arm Holdings Poised for Major Transition in Chip Industry

Arm Holdings, known for licensing chip design technology to major firms like Apple, plans to significantly increase prices and consider making its own chips to boost revenue. Despite historically operating in the background, the company is shifting strategy to directly compete with its largest customers.

In a bold strategic shift, Arm Holdings, the technology supplier behind the architecture of many industry-leading chips, aims to significantly hike its licensing fees and potentially enter the chip production market itself. The British firm has largely operated behind the scenes, fueling billions in global sales with its intellectual property used by giants like Apple, Qualcomm, and Microsoft. However, recent revelations suggest a drastic change in its approach to boost its $3.23 billion revenue.

Under the leadership of SoftBank CEO Masayoshi Son and Arm CEO Rene Haas, the company is allegedly devising plans to increase its annual smartphone revenue by $1 billion through a project internally known as "Picasso." Details, previously undisclosed, emerged during a trial where Arm sought, unsuccessfully, higher royalties from Qualcomm. The initiative includes a notable increase in per-chip royalty rates, particularly for its Armv9 architecture.

Despite the disclosed intentions, industry experts express concern that Arm's strategy could alienate key clients like Apple and Qualcomm, who have the capability to design custom chips without needing ready-made offerings. Arm's consideration of entering the complete chip design market indicates its readiness to compete directly with its current customers, a move that could reshape industry dynamics.

(With inputs from agencies.)