The British chip architect Arm, which has been owned by Softbank since 2016, is significantly responsible for the development of processors for iPhones and Mac computers. However, as reported by The Information, Apple pays unusually low fees for the licensing of the chip architecture. Softbank CEO Masayoshi Son already criticized this in a meeting with Arm executives in 2017.

Arm implementations in the embedded field are the most widely used among chip architectures due to the large number of licensees and the significant advantages of the architecture. Both Apple and chip manufacturer QUALCOMM, which is used in many Android smartphones, rely on the Arm architecture. However, according to The Information, Arm has played a crucial role in giving Apple devices a competitive advantage. The current licensing agreement between Apple and Arm was signed in September and is expected to last until at least 2040.

Nevertheless, Softbank has repeatedly tried to renegotiate the financial terms, but so far without success. Apple pays less than 30 cents for each of its million devices sold annually to Arm. This is the lowest licensing fee among Arm's smartphone chip customers and accounts for less than five percent of the company's total revenue.

The shrinking smartphone market is also noticeable at Arm. In the second quarter of the 2024 fiscal year, the company recorded a loss of $114 million, compared to a profit in the same period last year. However, Arm was still able to increase its revenues and narrowly missed the analysts' revenue forecast. Since its IPO this year, Arm's listing on NASDAQ has gained 27.23 percent and closed at $64.89 per share on 12/11/2023.

However, analysts' expectations for Arm are different. The average target price for the stock is currently $61.59, which is 8.39% below the current price. Out of 27 Wall Street analysts, 18 recommend buying the stock, eight hold it, and one recommends selling it. The highest target price is $85.00, while the lowest is $46.00. This would correspond to an upside potential of 26% and a downside of 32%.