Arm’s (chip company) CRAZY business model
Full video on my channel: • What is ARM?
Arm isn’t your typical chipmaker.
Instead of producing the physical processors, they design the blueprints and architecture, then license these intellectual properties out to other companies which then build Arm-based chips according to these specifications. Arm doesn’t manufacture or sell any chips directly.
So, when Apple started creating its own custom chips for its MacBooks, dubbed Apple Silicon, they used the blueprints provided by Arm to create these chips.
This is how Arm makes most of its money, by collecting royalties every time a company makes a chip using its design. And thanks to the company’s market dominance, over 160 billion chips were based on Arm’s designs last year.
This business has grown 16.7% year-over-year. Arm’s non-royalty revenue is taken from the licenses for processor designs to other semiconductor companies. Essentially, some semiconductor companies pay an up-front fee to gain access to the technology, and then a subsequent royalty on every chip that uses one of its designs.
Arm’s revenue for 2022 was $2.68 billion which is actually a 1% decline from 2021 at $2.7 billion.
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