Most Android smartphones and tablets use either an Intel Atom processor or an ARM-type processor, which may be made by one of over a dozen component manufacturers from across the world such as Qualcomm, Samsung, Nvidia and MediaTek. Let's put the Intel Atom processor to one side and consider the ARM processor business: ARM Holdings is the owner of the ARM designs but rather than design and build processors, as Intel does, instead ARM designs the processors and then licenses these to various manufacturers across the world. This ingenious business model means that ARM takes on the risk of a developing a processor core and the electronic component manufacturers take on the risk of building the hardware.
ARM offers a number of different licenses depending on what the component manufacturer wishes to do, but the usual format is an initial sum, which provides access to ARM engineers and the designs, followed by a license agreement based on the market value of the processors being built, usually between 1% to 2%. ARM's licenses vary from a pre-designed component ready for manufacturer to the ability to use the architecture as the licensee sees fit. This is how the outgoing Qualcomm Krait architecture and Apple Swift processor designs work; they're based on the ARM Cortex-A15 designs but with the manufacturers' own implementation. One key point here is that ARM's license fees vary according to the complexity of the design and support required. Fortunately, multiple copies of the same design (in other words, dual, quad or more core processors) don't usually cost more than a single license, but combining two architectures in a big.LITTLE processor does increase costs (although ARM offers a discount). ARM do, however, charge a royalty for every chip used, so if the MALI graphics chip is used, this also incurs a license fee. Some modems contain ARM processor cores, too; in 2013 ARM explained that most smartphones contained between three to five of their cores and there's every chance that this number has increased since then. The more complex the System-on-Chip, or SoC, the higher the licence fee to ARM Holdings.
The improvements to system performance through having those high performance but thirsty processor cores, combined with reduced battery consumption (when using the lower powered processor cores) makes the big.LITTLE approach worth the additional license fees. ARM are able to add value to the SoC manufacturers' product and these recurring license fees is what allows the business to continue to develop processor cores; next year's ARM Cortex-A72 is shaping up to be a very powerful chip indeed, almost four times quicker than the Cortex-A15.