Apple Resists Arm's Payment Hike Demand Despite IPO Pressure: Report

Apple Inc. AAPL has reportedly decided not to augment its payments to Arm Holdings ARM.

What Happened: In the wake of its recent initial public offering, Arm has reportedly been pushing Apple to pay more than $0.30 per iPhone for its intellectual property, reported AppleInsider. 

Apple and Arm share a long-standing partnership dating back to the Newton era in the late 1980s. In fact, Cupertino once held a 43% stake in Arm, which it progressively sold off over the subsequent decade. 

Apple has reportedly invested between $25 million and $100 million in Arm’s latest IPO.

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Masayoshi Son, CEO of Arm’s parent company, SoftBank, has expressed dissatisfaction with the low payment. The report noted that Apple spends more on new iPhones’ plastic screen protectors than on Arm. 

Despite the mounting pressure, Apple continues to pay less than 30 cents per device to Arm, the lowest rate amongst Arm’s clients. 

This payment is approximately half of what Qualcomm and MediaTek pay to Arm. The report shows Apple’s contribution to Arm’s total sales is less than 5%.

Arm’s attempts to increase prices with other companies have also been rejected, leading to the shelving of the plan. The contract between Apple and Arm, originally set to expire in 2028, has now been extended beyond 2040, as announced by Arm in September 2023.

Why It Matters: This refusal by Apple to increase payments comes at a time when the global smartphone market is seeing an upturn in sales, led by Apple’s iPhone 15. 

This breakthrough ended a 27-month sales decline. 

However, during China’s recent Singles Day shopping festival, Apple reportedly experienced a 4% year-on-year decline in smartphone sales, in sharp contrast to significant sales increases by Chinese rivals Huawei and Xiaomi.

Photo via Shutterstock

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