Apple has recently signed a new long-term agreement with Arm, the British chip design company that provides the technology behind Apple’s custom silicon processors. The deal ensures that Apple will have access to Arm’s chip architecture for the next two decades and beyond, according to Arm’s initial public offering documents.
Arm’s IPO reveals Apple’s new deal
Arm, which is owned by Japan’s SoftBank Group, announced on Tuesday that it plans to go public on the US Nasdaq stock market with a valuation of $52 billion, which would make it the largest IPO in the US this year. In its filing, Arm revealed that it has entered into a new deal with Apple that extends beyond 2040, continuing its longstanding relationship of collaboration with the Cupertino-based company.
“We have entered into a new long-term agreement with Apple that extends beyond 2040, continuing our longstanding relationship of collaboration with Apple and Apple’s access to the Arm architecture,” Arm said in the document.
The agreement means that Apple will be able to continue designing its own custom chips for its iPhones, iPads, Macs, Apple Watches, and other devices using Arm’s technology platform. Apple has been using Arm’s instruction set since the early 1990s, when it launched its Newton handheld computer, which used an Arm-based processor chip. Since then, Apple has become one of the leading innovators in chip design, creating powerful and efficient processors such as the A15 in the iPhone 14 and the M2 in the MacBook Pro.
Apple invests in Arm along with other tech giants
Apple is not the only company that has a vested interest in Arm’s success. The chip design firm also said that some of the world’s largest technology companies, including AMD, Google, Intel, Nvidia, Samsung, and TSMC, have “indicated an interest” in buying “up to an aggregate” of $735 million in Arm shares. TSMC, the world’s largest contract chipmaker and Apple’s main supplier, has said it will decide this week whether to invest in the chip designer.
By holding Arm’s shares, these companies will hope to have some influence over Arm’s management and strategy. Arm licenses its chip designs to over 500 companies, and its architecture is used in 95 percent of the world’s smartphones. Arm is also expanding into other markets such as cloud computing, automotive, and internet of things.
Arm’s IPO follows Nvidia’s failed acquisition attempt
Arm’s decision to go public comes after its plan to sell itself to Nvidia, the US-based graphics chip maker, fell apart earlier this year. Nvidia announced in 2020 that it had agreed to buy Arm from SoftBank for $40 billion, but the deal faced strong opposition from regulators in the UK , EU, and US over antitrust and national security concerns. Nvidia eventually abandoned the deal in January 2022, saying that it was clear that it would not receive the necessary approvals.
The UK government had intervened in the deal on the grounds that Arm was a strategic asset for the country and that its sale could affect its sovereignty and security. Many of Arm’s customers also expressed their worries that Nvidia would gain an unfair advantage over them or limit their access to Arm’s technology. Arm’s IPO is seen as a way to preserve its neutrality and independence as a global chip design leader.