UK-based semiconductor firm Arm Holdings (ARM) is considering hiking 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 main customers, such as Qualcomm (QCOM) and Apple (AAPL).
Building on plans that date back to 2019, the “Picasso” project aims to secure for ARM a much greater revenue share than it currently generates through its business model of licencing its intellectual property.
For instance, Reuters notes that AAPL’s revenue from its hardware products, which all rely on ARM technology, was 90 times that of ARM’s $3.23 billion in sales in Fiscal year 2024.
The plans came to light after ARM, which is 90% owned by Japan’s SoftBank Group (SFTBF), tried unsuccessfully to win higher fees from QCOM.
Trial Sheds Light on ARM Strategy
The details seem to have come to light following legal action between the two companies. Last month QCOM stock soared after it won a legal battle with ARM over its acquisition of Nuvia and its licencing deal with the UK firm.
Under the preceding agreement, Nuvia was paying a larger license fee to ARM than QCOM, which switched Nuvia to its lower license fee after purchasing the company. Whilst details of the case were reported at the time, Reuters says the scale of ARM’s ambitions regarding pricing and making its own chips has not been previously reported.
Last week it was revealed ARM was in talks to acquire semiconductor firm 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 around 10% upside from current levels. Shares of ARM have risen by 105% in the last year.
