Apple Extends Its Chip Licensing Deal With Arm Until 2040

Apple has signed a new long-term agreement with Arm, the British chip design company that provides the technology behind the iPhone and Mac processors. The deal, which was revealed in Arm’s initial public offering documents, extends Apple’s access to Arm’s architecture beyond 2040.

Apple and Arm: A Longstanding Partnership

Apple and Arm have a longstanding partnership that dates back to 1990, when Apple was one of the first companies to collaborate with Arm and use its chip technology for the Newton handheld computer. Although the Newton was a commercial failure, Arm’s chip designs proved to be successful and became the industry standard for mobile devices.

Apple Extends Its Chip Licensing Deal With Arm Until 2040
Apple Extends Its Chip Licensing Deal With Arm Until 2040

Apple has been using Arm’s instruction set to create its own custom processors for its products, such as the A-series chips for the iPhone and iPad, the S-series chips for the Apple Watch, and the M-series chips for the Mac. These chips offer Apple more control over the performance, power efficiency, and features of its devices, as well as differentiation from its competitors.

Arm’s IPO: A $52 Billion Deal

Arm announced on Tuesday that it plans to go public in a $52 billion deal, which would be the largest initial public offering in the U.S. this year. The company said that it has received interest from some major technology companies, including AMD, Apple, Google, Intel, Nvidia, Samsung, and TSMC, to buy up to $735 million worth of shares.

Arm’s IPO comes after Nvidia’s failed attempt to acquire the company from its parent company SoftBank. Nvidia announced in 2020 that it would buy Arm for $40 billion, but the deal faced regulatory hurdles from the UK, EU, and US authorities. Nvidia eventually abandoned the deal in 2022, citing “significant regulatory challenges”.

What Does This Mean for Apple?

By signing a new deal with Arm that goes past 2040, Apple secures its access to Arm’s chip technology for many years to come. This means that Apple can continue to develop its own processors based on Arm’s architecture and enjoy the benefits of having a tight integration between hardware and software.

The deal also gives Apple some influence over Arm’s management and direction, as Apple will be one of the shareholders of the company. This could help Apple ensure that Arm remains independent and neutral, and does not favor any particular licensee over another.

The deal also shows that Apple is confident in its strategy of using its own chips for its products, rather than relying on third-party suppliers like Intel or Qualcomm. Apple has been gradually transitioning its products to its own silicon, starting with the Mac in 2020. The company is expected to launch more products with its own chips in the future, such as the Vision Pro, a mixed reality headset that is rumored to debut in 2024.

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