Arm Holdings has historically not sold chips; rather, it has developed CPU architecture and intellectual property that it has licensed to others. Customers use Arm's designs to build their own chips. Apple, for instance, places Arm-based processors into its own MacBooks and iPhones, while firms like Qualcomm sell its Arm-based chips to other device makers. Arm makes money in two key ways: an upfront licensing fee and a royalty on every chip shipped. If a $1,000 smartphone has $50 of Arm content and Arm charges a 5% royalty rate to that customer, Arm will get 5% of the Arm content, or $2.50 per chip shipped.