Types of License

Although I wrote about there being three high level license types (processor, POP and architectural) in reality there’s a spectrum of options that ARM offers.

Academic licenses are effectively free. You can’t sell any designs but it’s a great way to build familiarity with an architecture. DesignStart is a low cost option for an academic/research arm of a company. Again, neither of these designs can be sold which is why the up front fee is very low/effectively zero.

ARM offers single use licenses for companies who just need a particular core for a single project (e.g. I want to build a single design based on the Cortex A9). A single use license for a Cortex A-class CPU will be somewhere around $1M up front plus ~2% per chip sold. The single use licenses are really useful for startups or very specific design needs within a company.

Multi-use licenses make a bit more sense for larger companies with multiple products. Here you get a larger up front fee but you can use your licensed CPU design within any number of products within a certain period of time (e.g. 3 years). During that time frame you can design as many products as possible, but you cannot begin any new designs after the 3 year period ends without a license renewal.

Perpetual multi-use licenses are more common in larger companies. These allow the licensee to use a core in any number of devices, indefinitely. As some ARM licensees can keep the same core in use for 10 - 20 years (particularly in industrial applications), the perpetual multi-use license gets a fair bit of use.

The subscription license is quite possibly the most interesting out of the pyramid. Companies can purchase a subscription license to ARM’s entire portfolio of products, for a set number of years. What a subscription license really enables is engineering managers within a company to start a chip project without having to worry about asking for budget for a large up front license fee since the company as a whole has already paid it. The up front fee here is multiple times the $10M top end for a standard part, for obvious reasons.

Finally at the top of the pyramid is an ARM architecture license. Marvell, Apple and Qualcomm are some examples of the 15 companies that have this license.

The Chosen Three

Since ARM doesn’t actually make any chips of its own, it needs to ensure that for each generation there are launch partners that will produce designs based on the latest and greatest. For each new microprocessor IP, ARM chooses up to three partners to work very closely with. The reason for choosing three is to hopefully work with companies targeting multiple markets. We tend to focus on the high-end smartphone/tablet SoC space here, but ARM architectures find their way into industrial, digital home, TV and other markets as well.

These companies get earlier access than any other licensee to whatever new microarchitecture ARM is working on. The licensees in exchange help debug and test the IP, even providing feedback directly to ARM. The benefit to the licensee is the potential for a significant time to market advantage on the new microarchitecture.

How ARM Makes Money Market Share & Final Words
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  • Crono - Friday, June 28, 2013 - link

    So basically ARM is like an author who choose to work with a bunch of different publishers?

    It amazes me how dominant they are, though, in the mobile processor industry, all without having to manufacture chips themselves. 45 billion chips... wow. And I'm guessing there is still plenty of room to grow with more embedded chips in more devices.
  • airmanchairman - Friday, June 28, 2013 - link

    "It amazes me how dominant they are, though, in the mobile processor industry, all without having to manufacture chips themselves. 45 billion chips... wow."

    Their philosophy has always been centred on the needs of their client industries, which extend far beyo
  • airmanchairman - Friday, June 28, 2013 - link

    ...nd the mobile processor industry into the vast all-purpose market (street lights, lifts, automatic turnstiles etc). These industries strictly specified the maximum power output the chips could be capable of (used to be 700mW) and ARM designed within those parameters. As such their entire R&D/Logistics/Marketing focus has been perfectly suited to the battery-power-constrained mobile industry.

    Intel, on the other hand, after decades of dictating to the booming desktop industry with its faster/more cores/larger plants philosophy, is only just coming to grips with the power efficiency and discipline required to compete with ARM in the rapidly growing mobile sector.

    The new Haswell architecture shows the promise and potential that Intel may
  • airmanchairman - Friday, June 28, 2013 - link

    ... bring to the battle against ARM.
  • nadim.kahwaji - Friday, June 28, 2013 - link

    veryyyy nice post, anand i know that you are so busy, but we miss the podcast !!!!!!
  • blanarahul - Friday, July 26, 2013 - link

    Umm... Does Qualcomm also pay royalty for the chips that use Krait?
  • blanarahul - Friday, July 26, 2013 - link

    Is Qualcomm automatically eligible to use any of ARM designs since they are above the "Subscription Licence" level in the pyramid?
  • dealcorn - Friday, June 28, 2013 - link

    I could not follow the sense of your statement "From Intel’s perspective, it made the mistake of licensing the x86 ISA early on in its life, but quickly retreated from that business." I thought IBM required that Intel license X86 to competitors as a pre condition of IBM's selection of Intel's 8086 for the IBM PC. Did Intel made a boo boo letting IBM use the 8086 in the IBM PC? It was reported that Intel's selection of x86 license partners was driven by the dual criteria that the partner must be acceptable to IBM and also likely incompetent to exploit the benefits of the license. In retrospect, their selection of partners achieved these goals. What was Intel's licensing mistake?

    The aphorism, "Knitter, stick to your knitting" has long been appreciated as a useful business strategy. ARM is properly commended for it's strict adherence to this truism in it's attempted optimization of architecture design. Intel appears focused on SoC level optimization. Intel's holistic approach is more time consuming and capital intensive. Consumers will ultimately vote with their wallets which approach is better in the contested ultra mobile space.
  • SleepyFE - Friday, June 28, 2013 - link

    Intel licensed it's IP to AMD, but AMD didn't throtle it's CPU's so it would get more business with constant iteration of the same architecture with marginal improvements to it (Intel's tic toc development model). AMD made the best use of what they got from Intel. At that time their (AMD's) CPU's were faster and they were eating away Intel's business. Intel had since then made a new architecture and did not license it to AMD. Consequently AMD fell behind and had not recovered since.
  • Wolfpup - Friday, June 28, 2013 - link

    AMD and Intel cross license x86. It's not fair to claim x86 is Intel's thing along, given how much stuff Intel has to license from AMD for it-heck, the most obvious is 64-bit. The updated ISA is AMD's design, and Intel started using it a few years later.

    "At that time their (AMD's) CPU's were faster and they were eating away Intel's business. Intel had since then made a new architecture and did not license it to AMD. Consequently AMD fell behind and had not recovered since."

    I can't remember if AMD ever actually licensed chip designs-if they did, it wasn't recent, would have been like the 486. Everything since then that AMD sells has been AMD's design. When AMD was faster, that was with entirely AMD designs. And no, Intel doesn't license Core, but that's not new like you're saying, that's been the case since the 486 days (if those were even licensed), and it's not why AMD's fallen a bit behind. Intel was making horrible decisions with their CPUs, and AMD was designing better ones. AMD's stuff is still really strong/good, it's just Intel's bigger, has thrown more resources at it, usually has a process node advantage, and since getting serious again has been able to have more powerful chips at the high end (though of course the reality is AMD's chips keep getting more powerful too, and are only "bad" in comparison to Intel's newest, and sometimes even then AMD looks better, like that platform comparison using integrated graphics where AMD's new $140 CPU was stomping on one of Intel's best i7s, often 50% better).

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