SoftBank Group-owned chip design company Arm reportedly informed several customers of an intended shift in the way it charges some royalties, with fees set to be eventually based on a percentage of the device selling price.

Financial Times (FT) reported comments from multiple sources outlining the new business model, with one claiming it was being earmarked to take effect in 2024.

The newspaper explained Arm’s current pricing model for most of its clients was based on gaining licence fees and royalties from chipmakers, charged as a set percentage of the ASP of each chip.

Following the floated change, it claimed, the royalty fee would be paid by manufacturers based on the device ASP, with the aim of deriving more revenue from each unit.

FT noted some large smartphone players already had specific deals with Arm based on a different structure.

Speculation on the company’s future model comes as parent SoftBank continues to progress an IPO of Arm, which has been the subject of much media attention since a proposed Nvidia sale fell through in 2022.

Commenting on the speculation in a Twitter thread, industry analyst and VP of analysis at Opensignal Ian Fogg noted the rumoured change would alter the value chain along with increasing “price pressure at a difficult time for the industry with slowing shipments and a difficult economy”.

“Short-term, there are no viable alternatives to Arm in smartphones, longer-term this will increase R&D efforts by Arm customers to find good enough alternatives.”