ARM doubles royalty rates to 2 percent, sees a 25% rise in profits

Do you know that the design of the processor in your phones and tablets are most probably done by a company called ARM? The British company is set to see a huge boost in the returns for its efforts, by nearly doubling the royalty rates it charges to smartphone vendors, semiconductor companies (the makers of the processors in your phones) and other licensees.

ARM’s designs powered nearly 3.5 billion devices last year alone, which is staggering. In return, the firm made paltry revenues of 225.9 million pounds. Right now, they charge around 1-1.5% of royalty rates to the licensees – Apple, Samsung, Qualcomm, MediaTek etc. These rates are for ARMv7 and ARMv6 based devices, the latter being almost negligent currently. We’re seeing a jump to ARMv8 now, and for these designs, ARM will be starting to charge royalty at 2%.

In short, the designers of the heart of your phones is going to see a bigger return for its efforts, which is nice to see.

Source | Image courtesy Bloomberg