ARM and Microsoft today signed a new licensing agreement for the ARM architecture.

The agreement extends the collaborative relationship between the two companies. Since 1997 Microsoft and ARM have worked together on software and devices across the embedded, consumer and mobile spaces.

The deal suggests that Microsoft may design its own ARM-based hardware for use in future devices, in a similar way as Apple was said to have designed the A4 chip in-house based on the ARM Cortex-A8 core. The A4 chip is in Apple's iPad tablet computer and the iPhone 4 smartphone.

ARM licenses processor IP under a flexible licensing model, enabling highly integrated solutions for a variety of applications ranging from mobile devices to home electronics and industrial products. ARM customers can license the ARM architecture or specific processor implementations.

Details of the agreement will remain confidential, the companies said.