33
© 2018 Arm Limited Tokyo 18 May 2018 A backward glance and a forward view Ian Thornton, Head of Investor Relations Arm Limited is a subsidiary of
© 2018 Arm Limited
Tokyo18 May 2018
A backward glanceand a forward view
Ian Thornton, Head of Investor Relations
Arm Limited is a subsidiary of
© 2018 Arm Limited 2
Arm update
A Backward Glance: Progress in 2017• Financials• Investments / hiring• Meltdown / Spectre
A Forward View: • Market forecasts• Arm China JV• New technology for smartphones and IoT
© 2018 Arm Limited 3 © Arm 2018 3
Licensing
© 2018 Arm Limited 4
2017 Licensing: Revenue
$0m
$100m
$200m
$300m
$400m
$500m
$600m
$700m
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
3%2%
20%
4%
© 2018 Arm Limited 5
2017 Licensing: Revenue
$0m
$100m
$200m
$300m
$400m
$500m
$600m
$700m
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
10%
© 2018 Arm Limited 6
2017 Licensing: 141 is the mid-point of normal range
110
130
150
170
190
15
16
17
14
Historic licensing
14 16 1715Year 13
13
Cortex-A Cortex-R Cortex-M MaliClassic0
45
16
58
Average= 39
Average= 70
Withdrawnfrom licensing
Av.=15
22Av.=22
© 2018 Arm Limited 7
DesignStart Pro – Launched June 2017
• Arm’s most popular processors have no up-front fee
• First 5,000 chips also royalty free
• Click-to-accept licensing agreement
• Targeted at academia, start-ups and small business units in large companies
© 2018 Arm Limited 8
DesignStart – Enabling the entire industry to build chips
244Cortex-M licenses in
284days in Fiscal 2017
DesignStart ProLaunched 20 June 2017
License-fee free; royalty bearing
>2600Cortex-M downloads
to date
DesignStart EvalLaunched end June 2017No fees. Evaluation only.
Optimised for FPGA
© 2018 Arm Limited 9
2017 Licensing: 385 licenses signed
110
130
150
170
190
15
16
17
14
Historic licensing
14 16 1715Year 13
13
Cortex-A Cortex-R Cortex-M MaliClassic0
45
16
302
Average= 39
Average= 70
Withdrawnfrom licensing
Av.=15
22Av.=22
© 2018 Arm Limited 10 © Arm 2018 10
Royalties
© 2018 Arm Limited 11
2017: Industry growth vs Arm growth
Value($)
Volume# chips
OverallSemiconductor
Industry+22%
+14%
Strong growth in memoryand graphics for data centre
$410bn
Value($)
Volume# chips
RelevantSemiconductor
Industry
+9%
+17%
Strong growth in MCUs;slower growth in apps
for mobile
$165bn
Value($)
Volume# chips
ArmRoyalty
Revenue
+12%
+20%
Arm gaining share in embeddedRoyalty rate increasing
$1.1bn
© 2018 Arm Limited 12
0
5
10
15
20
1991 2017
Arm-based chip shipmentsAr
m-p
ower
ed S
oCs s
hipp
ed (b
illio
ns)
21.3bn
39%Market share in 2017
120bnArm-based chips shipped to date
17.7bn
Calendar Years
© 2018 Arm Limited 13 © Arm 2018 13
InvestmentsProfitability
© 2018 Arm Limited 14
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2013 2014 2015 2016 2017
Investing in engineering to increase productive output
Arm recruitment is consistent with previous years
Focus on retaining quality as well as quantity; and on cultural and organisational integration
Expect to sustain this run rate for next 2-3 years
+21%
+19%
+23%+16%
+18%+13%
Non-Engineering
Engineering
© 2018 Arm Limited 15
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
£0m
£200m
£400m
£600m
£800m
£1,000m
£1,200m
£1,400m
£1,600m
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue
Total Costs
Adjusted EBITDA
Headcount
Revenues, investments and profits
Until 2016 revenues grew faster than costs as Arm constrained investment in R&D to enable increasing profits
For the current phase of investment Arm expects costs to grow faster than revenues
This should yield even greater profits in the future
Fiscal years
Investment strategy
© 2018 Arm Limited 16 © Arm 2018 16
Managing new risks and threats
© 2018 Arm Limited 17
© 2018 Arm Limited 18 © Arm 2018 18
Forward View
© 2018 Arm Limited 1919 Confidential © 2018 Arm Limited
On track for 100 billion Arm-based chips shipped 2017 + 2018 + 2019 + 2020
Forecasting future growth
26 years 4 years
20171991 2021
100 billionchips shipped
100 billionchips shipped
1 Trillionchips shipped
© 2018 Arm Limited 20
Arm’s expanding opportunity
Mobile Computing
Automotive
Infrastructure
Market Share Market Value Market Value
45% $30bn
$20bn
2017
Other mobile chips
Applicationsprocessor
90%
20%
90%$21bn
$14bn
$14bn
$17bn
$4bn
$8bn
~1%
10%
2026
$19bn
Other automotivechips
IVI and ADAS
Servers
Networking
$32bn
$18bn
$22bn
$15bn
$15bn
© 2018 Arm Limited 21
Arm’s expanding opportunity
Embedded
Total Market
OtherMarkets
Market Share Market Value Market Value
$20bn
2017
Microcontrollers/SIM Cards
20% $17bn
$21bn
$7bn
$165bn
40%
2026
All chips withprocessors(current TAM)
Other chips
ConsumerElectronics
25%
$27bn
$21bn
$30bnController in IoT Devices $7bn90%
$24bn
$10bn
$220bn
$130bn39%$200bn
All addressable chips (future TAM)
40%
© 2018 Arm Limited 22
November 2017
General information pack (inc HR)
Arm China
Our Joint Venture explained
A new chapter: Building on strong foundations
Arm ChinaA Joint Venture: Built on strong foundations
© 2018 Arm Limited 23
10bn
x14095%Chips shipped by Chinese
partners using ARM processor technology
Growth in volume shipment by Chinese partners 2006-2017
Chinese designed SoC based on ARM
processor technology
>200CUSTOMERS
Arm has great success in China
© 2018 Arm Limited 24
China landscape
China is investing to become a net exporter of semiconductors
China already has world class chip developers
Some companies desire technology optimised for local market
Some Government projects are accessible to technology
• Chinese developed
• Chinese owned
• Chinese controlled
© 2018 Arm Limited 25
Arm decided to create “Arm China” Joint Venture
49% 51%Multiple investors
Largest single shareholder
© 2018 Arm Limited 26
Strong foundation for development in China
Sustain access to the Chinese market
Increase adoption of Arm technology
Partnerships with government & ecosystem
Localised products can be licensed globally by Arm Ltd
Reduced risk & enable other investment opportunities
© 2018 Arm Limited
Mobile Image
Making smartphones smarter
© 2018 Arm Limited 28
Smartphone – Growing volume and technologyMobile - 1.6Bn today, ~2.0Bn by 2022
Smartphone CAGR 4.3% over next 5 years
Source: Strategy Analytics and Arm
High-resolution display at all price points enabling capabilities for new and richer user experiences• AAA Game play, • HD video and • AR/MRAI for Natural Language and visual understanding5G Modem enabling increased compute3D and 360 video capture and playbackFeature phone users transition to 4G smartphones
Technology increasing opportunity
© 2018 Arm Limited 29
Arm ML suite of IP: designed for unmatched versatility and scalability:
Machine Learning (ML) processorObject Detection (OD) processorNeural Network (NN) software libraries
Market growth in units (today to 2028):Mobile - 1.7Bn to 2.2Bn
Smart IP Cameras - 160M to 1.3Bn
AI-enabled devices - 300M to 3.2Bn
Project Trillium: Arm ML for All Devices
© 2018 Arm Limited 30
EndpointsPhysical to Digital Interface, Long Battery Life
Smart NodesMore computer and power available, may be battery powered or not
Gateway NodeAccess to the larger network
Machine learning will be everywhere
IOT Gateways
Small RobotsEnvironmental
Monitoring
Wearable Heath & Fitness
MEMS Sensors Embedded AI
Smart Home Sensing & Voice
Hom
eIn
dust
rial
Clie
nt
Home networkingSmart TVs
TabletSmart Phone
Set top boxSmart Home End
Points
Smart Watch(Rich OS)
Fixed and Mobile Assets
5G/LTE/4G Operator WAN & Retail Wifi
Connected Medical
Transportation
Smart CamerasSpeech
Recognition
Drones
Cloud Core Network & Routing
Data Center
Smart Home Appliances
AR/VR
InfrastructureCore Networking & Servers
Services
© 2018 Arm Limited 31
%
Link to embedded
Smart speaker design / keyword spotting Voice recognitionin device
Speaker recognition
Keyword recognition
© 2018 Arm Limited 32
3333 © 2018 Arm Limited
The Arm trademarks featured in this presentation are registered trademarks or trademarks of Arm Limited (or its subsidiaries) in the US and/or elsewhere. All rights reserved. All other marks featured may be trademarks of their respective owners.
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