Softbank Group Corp. · TSE:9984
Softbank — Arm Holdings — Non-Deal Roadshow (January 2017)
38 slides from Softbank's roadshow presentation, January 2017
Slide 1: Arm Holdings Q3 2017 Roadshow Slides
Arm Holdings Q3 2017 Roadshow Slides Arm Holdings is a subsidiary of 1 v1 © Arm 2018
Slide 2: Technology trends that will redefine all industries
Technology trends that will redefine all industries Artificial Intelligence in Autonomous Augmented Hyperscale cloud every device machines reality and connectivity Security and Privacy 2 © Arm 2018
Slide 3: Arm defines the technology that will redefine all industries
Arm defines the technology that will redefine all industries Mobile and Networking Automotive Internet of Things Consumer and Servers and Robotics Artificial Intelligence in every device Autonomous machines Augmented reality Hyperscale cloud and connectivity 3 Security and Privac
Slide 4: Arm introduction
Arm introduction Global leader in technology licensing • R&D outsourcing for semiconductor companies Innovative business model • Upfront licence fee – flexible licensing models • Ongoing royalties on partner sales • Technology reused across multiple applications Long-term, secular growth markets >1,
Slide 5: Arm’s business model
Arm’s business model Arm develops technology that is licensed to semiconductor companies Arm receives an upfront license fee and a royalty on every chip that contains its technology Business Development 1) Arm licenses 2) Partners develop technology to chips and ship chip Partners them to OEMs Techn
Slide 6: Arm’s strategy
Arm’s strategy Maintain or gain share in long-term growth markets • From mobile phones to networking infrastructure and servers to embedded smart devices and automotive Increase value of Arm technology per smart device • Invest in developing more advanced processors with higher royalty rates • Physi
Slide 7: Arm’s main growth markets
Arm’s main growth markets Application Processors Networking & Servers Embedded Markets $55bn $38bn $85bn TAM 2025 TAM 2025 TAM 2025 Smartphones, tablets and laptops Base stations, routers, switches, and Automotive, white-goods, wearables, servers for cloud and data centres smart devices in ind
Slide 8: History of Arm
History of Arm Joint venture between Designed into first mobile Now all electronic devices can Acorn Computers and Apple phones and then smartphones use smart Arm technology 1990 1993 onwards Today 8 © Arm 2018
Slide 9: Smart devices contain many Arm processors
Smart devices contain many Arm processors Arm CPU Applications Processor chips can contain Touchscreen and Apps Processor Chip multiple Arm technologies Sensor Hub Arm v8-A processor for OS and apps Cortex-R controller for modem Cortex-M controllers for peripherals WiFi Arm Mali multimedia p
Slide 10: Arm-based chip shipments
Arm-based chip shipments 120bn 34% 17.7bn 18 16 15.1bn Arm-powered SoCs shipped (billions) 14 Arm-based chips shipped to date Market share in 2016 12 10 8 6 4 2 0 1991 Calendar Years 2016 10 © Arm 2018
Slide 11: Arm's opportunity continues to broaden
Arm's opportunity continues to broaden Semiconductor industry continues to grow: 4% by volume, 1% by value over past five years Proportion of chips with processors is increasing: 70% in 2016 Arm is gaining share within the “chips with processors” segment of the industry: 34% in 2016 * Data source: W
Slide 12: From revenue to profits
From revenue to profits Over 95% of revenues earned in US dollars FY 2016 Revenues $m £m %revs Licensing 601 437 34% Royalties are a growing proportion of revenues Royalty 974 751 59% Software and Services 114 83 7% Cost increase as Arm accelerates investment Total 1,689 1,271 100% in R&D for future
Slide 13: Qtr. ending December 2017 – Financial summary
Qtr. ending December 2017 – Financial summary Revenues ($m) Q3 2016 Q3 2017 Growth Licensing can fluctuate quarter to quarter Licensing 229 190 -17% Q1 up 22%; Q2 down 17%; Q3 up 54% seq. Royalty 248 297 20% Software and Services 31 33 6% Royalty revenue growth driven by market Total ($m) 508 520 2%
Slide 14: Licensing enables future royalties
Licensing enables future royalties Arm signed 115 licences YTD 2017 Arm’s current royalty revenues are derived from licences signed many years ago Growing base yields royalty revenues over long period Significant Royalty Potential $500m from Recent Licences $450m ~670 licences signed 1500 +115 since
Slide 15: Qtr. ending December 2017 – Progress against strategy
Qtr. ending December 2017* – Progress against strategy Licences signed Reported Royalty Units Growing for broad range of end markets 17 Cortex-M +16% Motor control, IoT 48 and security 5.7bn 19 Cortex-A for AI, consumer, automotive 7 Mali IP for mobile and Q3 Q3 consumer 2016 2017 2015 2016 2017 Key
Slide 16: Arm’s growth opportunity
Arm’s growth opportunity Arm’s expanding opportunity Share 2016* TAM 2016 TAM 2025 Mobile Application Processors Includes smartphones, tablets and laptops 90% $20bn $30bn Networking Infrastructure 17% $13bn $18bn Servers <1% $15bn $20bn Embedded Intelligence 30% $23bn $40bn Includes microcontrollers
Slide 17: Arm’s expanding opportunity
Arm’s expanding opportunity Share 2016* TAM 2016 TAM 2025 Automotive Automotive Application Processors and Automotive Controllers 10% $11bn $17bn Other Mobile Chips Modems, WiFi/BT, GPS, NFC, sensor hubs, image sensors, eMMC, etc… 45% $14bn $18bn Consumer Electronics 35% $20bn $25bn Includes Desktop
Slide 18: Arm’s opportunity in mobile and consumer
Arm’s growth opportunity Arm’s opportunity in mobile and consumer Continued growth from advanced technology and new form factors Growth has been driven by Consumers pay a premium for Investment in smartphones advanced Arm technologies performance and features has led to new form factors Arm content
Slide 19: Arm’s opportunity in automotive
Arm’s opportunity in automotive Functional safety, consolidation, partitioning, performance, power, cost Front Driver Headrest Head-up eCall Cellular radar alert displays display Front ADAS Telematics Navigation Bluetooth Cluster Rear Autonomous driving, ADAS, camera processor display camera Cluster
Slide 20: Arm’s opportunity in servers
Arm’s growth opportunity Arm’s opportunity in servers Targeting 25% share (~1% share today) Arm processors are suitable for Arm v8-A selected for High Now shipping into enterprise >50% of data centre workloads Performance Computing applications Microsoft has ported the core components Barcelona Supe
Slide 21: Arm’s opportunity in networking
Arm’s opportunity in networking Targeting >50% share of chips in next-generation networks Future networks will be based Networking software is being Accelerating data comms on open source collaboration optimised for Arm-based chips from server to server OpenDataPlane project members Network Function
Slide 22: Arm’s opportunity in IoT – silicon IP
Arm’s growth opportunity Arm’s opportunity in IoT – silicon IP The architecture of choice for IoT developers Cortex-M processors enable High-value tech is now available Every thing will be connected secure, low-cost IoT devices at consumer price points 1997 Annual production of IoT modules 200 bn I
Slide 23: Arm’s opportunity in IoT – software and services
Arm’s opportunity in IoT – software and services Investing to create new revenue streams Arm forecasts a $1 trillion TAM for IoT technology Arm’s IoT platform is being integrated into in 2035 OEM lifetime management services Electronic components Assembly Distribution IT services Installation Financ
Slide 24: Artificial intelligence in every device
Artificial intelligence in every device Learning in the cloud, inference at the edge Mobile Automotive Robotics Drones Home, surveillance IoT & analytics VR/MR Shipping & logistics 24 © Arm 2018
Slide 25: Machine learning and computer vision
Machine learning and computer vision The key workloads for intelligent computers Widely-available software tools Optimise for performance, cost Stable algorithms can be give developers access to ML and programmability hardwired into accelerators More than 50x AI performance boost on the CPU in the n
Slide 26: Autonomous machines
Technology drivers Autonomous machines Advanced compute is moving to the physical domain Robots and autonomous cars The physical domain requires Vehicle electrification will will operate alongside people stringent safety standards force the pace of change Cortex-R for safety critical systems Resilie
Slide 27: Augmented reality
Augmented reality New experiences and new user interfaces Seamless interactions between A demanding roadmap for Driving innovation in displays, humans, machines and data mobile GPU performance 3D sensors and computer vision Augmented reality (AR) overlays digital Latency: <16ms information onto the
Slide 28: Hyperscale cloud and connectivity
Technology drivers Hyperscale cloud and connectivity Infrastructure for the information revolution Enterprise compute is moving Insatiable demand for data is Workloads will be shared across to the cloud driving new standards devices, base stations and servers Performance targets for 5G networks 10
Slide 29: Information security
Information security The fundamental component of all connected systems Secure systems are built on a Devices must be kept secure Good security is inexpensive to hardware root of trust with regular software updates implement and costly to crack non- trusted trusted Secure, scalable, efficient device
Slide 30: Arm's current business
Investment strategy Arm's current business Arm develops intellectual property (IP) blocks which are used in silicon chips Our partners combine Arm IP with their own IP to create complete chip designs We earn license fees when we deliver Arm IP to our partners and royalties when our partners ship chi
Slide 31: Generating $600m annualised free cash flow
Accelerating investment Investing to create to increase share gains new revenue streams mbed Cloud SaaS business Early-stage investment but many years in research Securely connect any device into your network, using any communications technology, supporting any cloud platform Cloud provision
Slide 32: Revenues, profits and profitability
Investment strategy Revenues, profits and profitability £1,400m 45% Over the past 10 years Arm's Revenue Total Costs revenues grew faster than costs IFRS EBIT IFRS Margin 40% £1,200m 35% £1,000m Profits grew and profitability 30% edged over 40% £800m 25% £600m 20% At the start of the next phase of i
Slide 33: Investment philosophy
Investment philosophy “Now is the time to be sowing, not harvesting” Arm has over £1.2bn of net cash and no debt Rate of investment is discretionary and under £1,200m Arm's control £1,000m SoftBank has asked Arm to accelerate £800m investments and to increase risk appetite £600m All costs are
Slide 34: Return on Investments – Arm v8-A case study
Investment strategy Return on Investments – Arm v8-A case study Arm incurs R&D costs many years before revenue starts Multiple processors in development Research into 64-bit computing First generation started in 2000 of processors Architecture Arm v8-A development and Development starts processor de
Slide 35: Return on Investments – General case
Return on Investments – General case Arm incurs R&D costs many years before revenue starts New technology announced Research started Technology Recurring many years ago First delivery revenue technology starts agreements New technology development starts Initial development phase Investment ramps 1
Slide 36: Investing in people, infrastructure to create new products
Investing in people, infrastructure to create new products Costs are higher in 2017 as Arm expands R&D capability Future cost increases are expected to be consistent with increases in headcount £6m (£8m) £790m £75m £69m £53m £118m £477m *Share-based compensation was previously included in IFRS “othe
Slide 37: Contact information
Contact information Contact Title Contact +44 1223 400796 Ian Thornton Head of Investor Relations ian.thornton@arm.com More content available on our website: www.arm/com/ir Recent investor webinars and papers: • The route to a trillion devices white paper and a series of three webinars on the econom
Slide 38: Arm IR Updates
Arm IR Updates The Arm IR team sends out regular updates on news and technology trends To register for these emails, visit: www.arm.com/ir-emails 38 © Arm 2018