Arm Holdings (NASDAQ:ARM) Will Raise Prices 300%, Fight Biggest Customers, Report Says

On By Littum

British semiconductor company Arm Holdings (ARM) is considering raising prices by as much as 300% as it seeks to develop a long-term strategy to drive growth, Reuters has reported.

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The plans could even see the company develop its own chips, in a move that could put ARM in direct competition with some of its key customers, such as Qualcomm ( QCOM ) and Apple ( AAPL ).

Based on plans dating back to 2019, the “Picasso” project aims to secure ARM a much larger share of revenue than it currently generates through its business model for licensing its intellectual property.

e.g. Reuters notes that AAPL’s revenue from its hardware products, all of which rely on ARM technology, was 90 times greater than ARM’s $3.23 billion in fiscal 2024 sales.

The plans emerged after ARM, which is 90% owned by Japan’s SoftBank Group ( SFTBF ), unsuccessfully tried to win higher fees from QCOM.

Trial sheds light on ARM strategy

The details appear to have emerged following litigation between the two companies. Last month, QCOM shares rose after it won a legal battle with ARM over its acquisition of Nuvia and its licensing agreement with the British firm.

Under the previous agreement, Nuvia paid a larger license fee to ARM than QCOM, which switched Nuvia to its lower license fee after acquiring the company. While details of the case were reported at the time, Reuters says the extent of ARM’s ambitions in terms of pricing and manufacturing its own chips has not previously been reported.

Last week, it was revealed that ARM was in talks to buy semiconductor company Ampere Computing, which was once valued at $8 billion ahead of a planned IPO that never happened.

Is ARM a good stock to buy?

Overall, Wall Street has a moderate buy consensus rating on ARM stock, based on 14 buys, four holds and one sell. The average ARM price target of $154.60 implies about 10% upside from current levels. Shares in ARM are up 105% in the last year.

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