Apple Resists Arm's Payment Hike Demand Despite IPO Pressure: Report
Portfolio Pulse from Benzinga Neuro
Apple Inc. (AAPL) has reportedly refused to increase its payments to Arm Holdings despite Arm's recent IPO and pressure from Arm's parent company, SoftBank. Apple maintains a payment of less than $0.30 per iPhone for Arm's intellectual property, which is significantly lower than what other clients like Qualcomm and MediaTek pay. Despite the push for higher payments, Apple's contribution to Arm's sales remains below 5%, and the contract between the two companies has been extended beyond 2040.
November 30, 2023 | 10:12 am
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Apple's decision to resist Arm's payment hike demand could positively impact its cost structure and margins, especially given the extension of their contract beyond 2040 at low rates.
Apple's refusal to increase payments to Arm, despite the latter's IPO pressure, indicates strong negotiation leverage and cost management. This could lead to improved margins on iPhone sales, which is positive for Apple's short-term financial outlook. The extension of the contract at these rates also provides long-term cost predictability.
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