UK chip-designer ARM has emerged as one of the companies set to get a boost from Apple’s iPhone launch, with financial experts saying the Cambridge-based firm will receive increased royalties as a result of its chip being at the core of the iPhone 5S.
ARM licenses the intellectual property for its chip designs to manufacturers and receives royalties for doing so.
The fingerprint-scanning iPhone 5S – revealed by Apple as its premium mobile device at its San Francisco HQ on Tuesday – features ARM’s chip designs on its 64-bit A7 chip. The move makes Apple the first smartphone manufacturer to boast a 64-bit processor.
“We believe the Apple A7 chip will generate a royalty rate in the 2.5 to 3 percent range, over double Arm’s current average,” wrote Matt Ramsay, an analyst at Canaccord, in a note to clients.
“Other Arm partners including Samsung, Qualcomm, Nvidia, Broadcom and MediaTek will be forced to follow suit.”
Apple says the A7 chip can deliver detailed graphics and complex visual effects normally restricted to desktop computers and gaming consoles. The Californian tech goliath also claimed the A7 chip is twice as fast as its predecessor, the A6.
"We see this as largely driven by ARM v8 64-bit used in the A7 and view the improvements as clear evidence of ARM's architecture being capable to move up the performance curve while retaining its low power envelope,” said Deutsche Bank in a note to its clients.
"Arm also charges a higher royalty rate of around 2 percent plus for v8 64 bit versus around 1.5 percent plus for v7 mobile apps processors currently," confirmed the bank.
However, critics have said the short term gains will be minimal and that users might not notice a big performance difference.
ARM told Techworld earlier this month that its chip architecture can be found in 90 percent of mobile devices. The company’s shares climbed 4.5 percent to £9.83 on Wednesday morning – the highest they’ve been since May.