Apple Inc (NASDAQ:AAPL) and soon-to-be-public semiconductor architecture designer ARM Holdings have reached a deal that provides the former with an important piece of intellectual property through 2040 and “beyond.”
The agreement gives Apple access to Arm’s semiconductor component designs for use in its iPhone and Mac chips, according to an Arm filing with the US Securities and Exchange Commission on Tuesday.
Arm, backed by Japan-based SoftBank, is expected to go public on the Nasdaq in the coming weeks at a valuation as high as $52 billion. That would make it the biggest tech IPO of 2023.
For Arm, the move was important to assuage some concerns that it has limited upside as a publicly traded company because it develops designs, rather than the chip hardware itself. Additionally, about half the company’s royalties currently come from products released between 1990 and 2012.
Now, it ensures that a major player in the sector will be using its designs until at least 2040, if not even longer, according to the filing.
“Further, we have entered into a new long-term agreement with Apple that extends beyond 2040, continuing our longstanding relationship of collaboration with Apple and Apple’s access to the Arm architecture,” Arm said in its updated SEC filing.
Specifically, Arm’s designs are used in almost every smartphone chip, including Apple’s A-series for iPhones. The company’s instructions detail how a central processor accomplishes tasks such as calculating arithmetic or accessing computer memory, and switching between different instruction sets is expensive and time-consuming.
Notably, Apple is just one of several big fish looking to get a piece of Arm’s upcoming IPO.
Alphabet Inc (NASDAQ:GOOG), Samsung Electronics Co Ltd (ADR) (LSE:BC94), Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) have all expressed interest in becoming cornerstone investors, and their investments could total about $735 million.
SoftBank will retain 90% of shares in the company after its earlier bid to sell Arm to Nvidia for US$40 billion was blocked by antitrust regulators in 2021, according to reports.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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