License Fees are an upfront payment to gain access to Arm ISA. The License Fees for ALAs (Architectural License Agreements) are far more expensive than for TLAs (Technology License Agreements, i.e. stock cores)
Royalties are a % per chip sold which are reflective of the level of Arm IP used. The Royalties for ALAs are far lower than for TLAs. That’s because TLAs holders are using far more Arm IP, whereas ALA holders design the cores/IP themselves
Overall royalties make up a far larger portion of Arm’s revenue, e.g. for 2022: $1.7B in royalties vs $1B for “non-royalties”
Hence why Arm has been increasingly concerned about the rise in ALA holders, especially Qualcomm switching back to their ALA
Arm makes money from Arm ISA from:
License Fees are an upfront payment to gain access to Arm ISA. The License Fees for ALAs (Architectural License Agreements) are far more expensive than for TLAs (Technology License Agreements, i.e. stock cores)
Royalties are a % per chip sold which are reflective of the level of Arm IP used. The Royalties for ALAs are far lower than for TLAs. That’s because TLAs holders are using far more Arm IP, whereas ALA holders design the cores/IP themselves
Overall royalties make up a far larger portion of Arm’s revenue, e.g. for 2022: $1.7B in royalties vs $1B for “non-royalties”
Hence why Arm has been increasingly concerned about the rise in ALA holders, especially Qualcomm switching back to their ALA
Sources:
Arm’s statements from SoftBank’s Annual Reports
AnandTech, it is very old but Arm hasn’t changed their business model for ages, just the termology