Is RISC-V Poised to Benefit From Arm’s Licensing Changes?

Amid industry challenges and after facing financial difficulties, ARM is considering different ways to increase its revenue, such as the possibility of raising the license price and expanding the license scope. This comes after the NVIDIA acquisition and with the ongoing semiconductor trade war. ARM China, Qualcomm, and other semiconductor vendors are looking at alternative business models, including the adoption of RISC-V and open-source designs to break from ARM's monopoly. What challenges has ARM been facing, what exactly has been reported, and why could this be the break RISC-V needs?

What challenges has ARM been facing?

Over the past few years, ARM has faced numerous challenges throughout the industry, all resulting in a company starting to show financial troubles. While it is hard to exactly pinpoint where the difficulties started, the proposed acquisition of ARM by NVIDIA was certainly one of the first signs. 

From NVIDIAs perspective, acquiring ARM would have been a major boost to its own technologies, being able to integrate the latest ARM technology into its devices while simultaneously targeting the server and data centre markets with combined ARM/NVIDIA solutions. Of course, this is not exactly how the rest of the industry saw the acquisition, instead accusing NVIDIA of looking to control ARM technologies and gain an unfair advantage over its competitors. After two years of debating and legal challenges, the acquisition failed, leaving the rest of the industry to celebrate as ARM would remain an independent semiconductor IP vendor.

However, many of those who were quick to object to the acquisition may not have considered the financial situation at ARM. The failure of NVIDIA left ARM in a state of limbo, trying to find new funding sources, including the possibility of going public via an IPO. At the same time, the ongoing semiconductor trade war between the West and China has seen ARM China reduce staff by 14%, and the main branch of ARM has already removed 40% of staff introduced by ARM’s former owner, SoftBank.

ARM may increase the price of licenses and expand their scope

With ARM due to introduce an IPO any day now, new reports have begun to surface that ARM is planning to change the terms of its license in an attempt to increase revenue. Currently, ARM’s business model works based on individual chips, such that each chip produced by a customer of ARM pays a specific amount. It doesn’t matter where these chips are used or the value of the end product; ARM will only collect a specified amount.

However, ARM has reportedly contacted its biggest customers, informing them that their license model will change. In this new change, ARM will now collect a portion of the sale of the device, as opposed to the chip itself, which ARM hopes will generate more revenue. Thus, ARM devices being used in expensive products, such as smartphones and laptops, will undoubtedly provide ARM with a bigger revenue stream.

To make matters worse, ARM’s new model will also require those using ARM IP to only sell chips to vendors who have license agreements with ARM. For example, Qualcomm produces mobile processors with ARM cores, but ARM will not allow Qualcomm to sell those mobile processors to smartphone manufacturers who do not have an agreement with ARM.

Could this be the break that RISC-V needs?

The new licensing model that ARM is supposedly switching to is already used by other major tech companies, including Qualcomm and Nokia. However, this move by ARM could be all the incentive needed for engineers to finally say goodbye to ARM and look towards other technologies, with RISC-V being of particular interest.

The beauty of RISC-V lies not in its implementation but in that the instruction set architecture is entirely open-source and free of charge. Of course, the physical implementation of a RISC-V processor can be closed-source and chargeable under any kind of license, but considering that the RISC-V movement is priding itself on its open-source nature, it is unlikely that RISC-V devices would ever fall under the same licensing agreements that ARM is planning to introduce.

As such, ARM moving to a new licensing model, which will undoubtedly increase the prices of ARM devices (as manufacturers will just pass the license fee to the consumer), will likely see engineers turn their back on ARM devices. In fact, the path with ARM is planning to take could very well be the cause of their demise (Oogway – One often meets their destiny on the road they take to avoid it).

So, if ARM goes through with this plan, the RISC-V industry will be presented with a massive opportunity to chip away at the monopoly that ARM has. Hopefully, semiconductor vendors such as Qualcomm and MediaTek will look towards RISC-V as a viable option, especially considering they would not be allowed to sell to non-ARM license holders.