Arm

In nineteen ninety, twelve engineers in Cambridge started a company that would never build a single chip. Arm designed processor architectures and licensed the blueprints to anyone who wanted to manufacture them. Building a chip factory costs five to twenty billion dollars. Arm skipped that entirely. They drew the plans and let everyone else spend the money building the factories. The licensing deal was elegant. Pay one to ten million dollars upfront for the design. Then pay Arm three to ten cents for every chip you manufacture. Three cents sounds like nothing. But when Apple, Qualcomm, Samsung, and MediaTek are all shipping your architecture and thirty billion chips go out the door every year, those pennies become nine hundred million to three billion dollars annually. Ninety nine percent of smartphones run on Arm designs. Every iPhone. Every Samsung Galaxy. Every cheap Android handset in Lagos and Jakarta. Arm's gross margins exceed ninety five percent because the company employs engineers, not factory workers.