Slide 1: A backward glance and a forward view
Arm Limited is a subsidiary of A backward glance and a forward view Ian Thornton, Head of Investor Relations Tokyo © 2018 Arm Limited 18 May 2018
Slide 2: Arm update
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 2 © 2018 Arm Limited
Slide 3: Licensing
Licensing 33 ©©Arm 2018 2018 Arm Limited
Slide 4: 2017 Licensing: Revenue
2017 Licensing: Revenue $700m 3% 2% $600m $500m $400m 20% $300m 4% $200m $100m $0m 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4 © 2018 Arm Limited
Slide 5: 2017 Licensing: Revenue
2017 Licensing: Revenue $700m $600m $500m 10% $400m $300m $200m $100m $0m 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5 © 2018 Arm Limited
Slide 6: 2017 Licensing: 141 is the mid-point of normal range
2017 Licensing: 141 is the mid-point of normal range Average Historic licensing = 70 190 15 58 170 14 45 150 Average 17 = 39 22 130 16 16 Av.=22 13 Av.=15 Withdrawn 110 from licensing Year 13 14 15 16 17 0 Classic Cortex-A Cortex-R Cortex-M Mali 6 © 2018 Arm Limited
Slide 7: DesignStart Pro – Launched June 2017
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 7 © 2018 Arm Limited
Slide 8: DesignStart – Enabling the entire industry to build chips
DesignStart – Enabling the entire industry to build chips 244 Cortex-M licenses in >2600 284 days in Fiscal 2017 Cortex-M downloads to date DesignStart Pro DesignStart Eval Launched 20 June 2017 Launched end June 2017 License-fee free; royalty bearing No fees. Evaluation only. Optimised for FPGA 8 ©
Slide 9: 2017 Licensing: 385 licenses signed
17 302 2017 Licensing: 385 licenses signed Average Historic licensing = 70 190 15 170 14 45 150 Average = 39 22 130 16 16 Av.=22 13 Av.=15 Withdrawn 110 from licensing Year 13 14 15 16 17 0 Classic Cortex-A Cortex-R Cortex-M Mali 9 © 2018 Arm Limited
Slide 10: Royalties
Royalties 10 ©©Arm 10 2018 2018 Arm Limited
Slide 11: 2017: Industry growth vs Arm growth
2017: Industry growth vs Arm growth $410bn $165bn $1.1bn Overall Relevant Arm Semiconductor Semiconductor Royalty Industry Industry Revenue +22% +20% +17% +14% +12% +9% Value Volume Value Volume Value Volume ($) # chips ($) # chips ($) # chips Strong growth in memory Strong growth in MCUs; Arm gaini
Slide 12: Arm-based chip shipments
Arm-based chip shipments 21.3bn 120bn 39% 20 17.7bn Arm-powered SoCs shipped (billions) 15 Arm-based chips shipped to date Market share in 2017 10 5 0 1991 Calendar Years 2017 12 © 2018 Arm Limited
Slide 13: Investments Profitability
Investments Profitability 13 ©©Arm 13 2018 2018 Arm Limited
Slide 14: Investing in engineering to increase productive output
Investing in engineering to increase productive output 6,000 +21% Arm recruitment is consistent with previous years 5,000 +19% +23% 4,000 +16% Focus on retaining quality as well as 3,000 +18% quantity; and on cultural and organisational +13% integration 2,000 1,000 Expect to sustain this run rate fo
Slide 15: Revenues, investments and profits
Revenues, investments and profits Investment strategy £1,600m 7,000 Until 2016 revenues grew faster £1,400m Revenue 6,000 than costs as Arm constrained Total Costs investment in R&D to enable £1,200m 5,000 increasing profits Adjusted EBITDA £1,000m Headcount For the current phase of 4,000 investment
Slide 16: Managing new risks and threats
Managing new risks and threats 16 ©©Arm 16 2018 2018 Arm Limited
Slide 17: Spectre / Meltdown
EVG SPECTRE =—meroown
Slide 18: Forward View
Forward View 18 ©©Arm 18 2018 2018 Arm Limited
Slide 19: Forecasting future growth
Forecasting future growth On track for 100 billion Arm-based chips shipped 2017 + 2018 + 2019 + 2020 26 years 4 years 100 billion 100 billion 1 Trillion chips shipped chips shipped chips shipped 1991 2017 2021 19 © 2018 Arm Limited 19 Confidential © 2018 Arm Limited
Slide 20: Arm's expanding opportunity
Arm’s expanding opportunity 2017 2026 Market Share Market Value Market Value Mobile Computing Applications $21bn processor 90% $32bn Other mobile chips $14bn 45% $30bn $18bn Infrastructure Networking $14bn 20% $19bn Servers $17bn ~1% $22bn Automotive $4bn IVI and ADAS 90% $20bn $15bn Other automotiv
Slide 21: Arm's expanding opportunity
Arm’s expanding opportunity 2017 2026 Market Share Market Value Market Value Embedded Controller in 90% $7bn IoT Devices $30bn $24bn Microcontrollers/ 20% $17bn SIM Cards $21bn Other Consumer 40% $21bn Electronics Markets $27bn Other chips 40% $7bn $10bn Total Market All chips with 39% $130bn proces
Slide 22: Arm China
Our Joint Venture explained Arm Arm China China AA new chapter: Joint Building Venture: on on Built strong foundations strong foundations November 2017 22 © 2018 Arm Limited General information pack (inc HR)
Slide 23: Arm has great success in China
Arm has great success in China >200 10bn CUSTOMERS Chips shipped by Chinese partners using ARM processor 95% technology Chinese designed SoC x140 Growth in volume based on ARM shipment by Chinese processor technology 23 © 2018 Arm Limited partners 2006-2017
Slide 24: China landscape
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 24 ©
Slide 25: Arm decided to create “Arm China” Joint Venture
Arm decided to create “Arm China” Joint Venture Multiple investors 49% 51% Largest single shareholder 25 © 2018 Arm Limited
Slide 26: Strong foundation for development in China
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 26 © 2018 Arm Limited
Slide 27: Mobile Image
Mobile Image Making smartphones smarter © 2018 Arm Limited
Slide 28: Smartphone – Growing volume and technology
Smartphone – Growing volume and technology Mobile - 1.6Bn today, ~2.0Bn by 2022 Smartphone CAGR 4.3% over next 5 years Technology increasing opportunity High-resolution display at all price points enabling capabilities for new and richer user experiences • AAA Game play, • HD video and • AR/MR AI fo
Slide 29: Project Trillium: Arm ML for All Devices
Project Trillium: Arm ML for All Devices Arm ML suite of IP: designed for unmatched versatility and scalability: Machine Learning (ML) processor Object Detection (OD) processor Neural Network (NN) software libraries Market growth in units (today to 2028): Mobile - 1.7Bn to 2.2Bn Smart IP Cameras - 1
Slide 30: Machine learning will be everywhere
Machine learning will be everywhere Endpoints Smart Nodes Gateway Node Infrastructure Physical to Digital Interface, Long Battery Life More computer and power available, may be battery powered or not Access to the larger network Core Networking & Servers Client Wearable Connected Heath & Fitness AR/
Slide 31: Voice recognition in device Speaker recognition
% Link to embedded Smart speaker design / keyword spotting Voice recognition in device Speaker recognition Keyword recognition 31 © 2018 Arm Limited
Slide 32: Miniaturization of IoT Devices
Virtual SIM Card) arm Aas . Mini SIM Micro SIM o SIM eSIM (MFF2) 25x 15mm 15x 12mm Pn <8 on 6x5mm 7 1996 2003 2012 2016 iSIM Miniaturization of loT Devices ae
Slide 33: Arm trademarks notice
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. www.arm.com/company/policies/trademarks 33 © 2018 Arm