ARM Holdings wants to raise prices for its chip designs as the SoftBank-owned firm aims to boost revenues ahead of a keenly awaited IPO in New York this year.
A report in the Financial Times said the UK-based group, which designs blueprints for semiconductors found in more than 95% of all smartphones, has recently informed several of its biggest customers of a radical shift to its business model.
Citing several industry executives and former employees, the FT said ARM plans to stop charging chipmakers royalties for using its designs based on a chip’s value and instead charge device makers based on the value of the device.
This should mean a jump in the amount ARM receives for each design it sells, as the average smartphone is much more expensive than a chip.
The FT said the changes represent one of the biggest shake-ups to ARM's business strategy in decades, at a time when SoftBank chief executive Masayoshi Son is seeking to drive up ARM’s profits and attract investors to its impending return to the public markets.
But the report added it had so far been frustrated by customers’ reluctance to accept the new arrangement.
SoftBank, which acquired ARM for £24.3bn in 2016, plans to retain a majority stake following the IPO.