Slide 1: Arm: Preparing for the future
Arm: Preparing for the future Ian Thornton, Head of Investor Relations Arm is a subsidiary of 1 © Arm 2017
Slide 2: Preparing for the future
Preparing for the future Predicting the future Investing for the future Financing for the future 2 © Arm 2017
Slide 3: Predicting the future
Predicting the future 3 © Arm 2017
Slide 4: August 1991: Arm invited all its customers to Cambridge
August 1991: Arm invited all its customers to Cambridge 4 © Arm 2017
Slide 5: August 1991: Arm invited all its customers to Cambridge
August 1991: Arm invited all its customers to Cambridge 5 © Arm 2017
Slide 6: August 2017: Arm Partner Meeting “Architecting Tomorrow”
August 2017: Arm Partner Meeting “Architecting Tomorrow” 6 © Arm 2017
Slide 7: August 2017: Arm Partner Meeting “Architecting Tomorrow”
August 2017: Arm Partner Meeting “Architecting Tomorrow” 800 customers and partners 600 Arm managers and engineers 50 technology presentations 3,500 meetings to align roadmaps Technology demonstrations 7 © Arm 2017
Slide 8: August 2017: Arm Partner Meeting “Architecting Tomorrow”
August 2017: Arm Partner Meeting “Architecting Tomorrow” Discussed long-term technology trends >10 years Shared and aligned roadmaps over next 5 years Agreed specifications for products in 2 years time Initiated sales cycles for product to be delivered next year Signed agreements for Q2 2017 8 © Arm
Slide 9: Arm works across and deep into each market
Arm works across and deep into each market OEM OEM Market OEM Also foundry and EDA for manufacturing 9 © Arm 2017
Slide 10: Arm product development
Arm product development Continuous engagement with OEM, S/W vendors, EDA, tools, foundries, etc. 10 © Arm 2017
Slide 11: Arm product development
Arm product development 1-5 years Software Product Systems Continuous engagement with OEM, S/W vendors, EDA, tools, foundries, etc. 11 © Arm 2017
Slide 12: Case study #1: Accidentally winning the tablet
Case study #1: Accidentally winning the tablet First +1GHz Arm processor Targeting the MID (Mobile Internet Computer) In 2003, Arm started to work on the first Arm processor targeting 1GHz (on 65nm) In 2004, Arm acquired Artisan for $1bn (50% of Arm’s market cap) Codename: Tiger Cortex-A8 12 © Arm 2
Slide 13: Case study #1: Accidentally winning the tablet
Case study #1: Accidentally winning the tablet Arm’s roadmap was heading towards the laptop First Apple iPad First Android Tablet 2010 2009 In H1 2006, Intel sold its Arm mobile business to Marvell In H2 2006, Arm learnt that Intel was developing “Atom” – a low power x86 for mobile In H1 2008, Intel
Slide 14: Case study #1: Accidentally winning the tablet
Case study #1: Accidentally winning the tablet And turning one of our biggest customers into a competitor 450 Arm-based devices winning in PCs? Millions 400 350 Hybrid 300 Clamshell Tablet 250 Notebook 200 150 100 50 CY2005 CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 CY2016
Slide 15: Case study #2: AI is not just a cloud technology
Case study #2: AI is not just a cloud technology • Today majority of AI workloads are run in the cloud • Training algorithms need huge amounts of compute • In the future, trained algorithms will run on inference engines – these are much simpler and will run on client devices (phones, camera, cars, e
Slide 16: Case study #2: AI is not just a cloud technology
Case study #2: AI is not just a cloud technology 16 © Arm 2017
Slide 17: Investing for the future
Investing for the future 17 © Arm 2017
Slide 18: 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 18 © Arm 2017
Slide 19: 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 19 Security and Priva
Slide 20: Journey of the autonomous automotive
Journey of the autonomous automotive 20 © Arm 2017
Slide 21: “90% of automotive innovation comes from electronics and software.”
“90% of automotive innovation comes from electronics (semiconductors) and software.” – Audi at CES Asia 21 © Arm 2017 Confidential © Arm 2017
Slide 22: Cars run on code
Cars run on code F-35 24 Windows 10 60 US Army future combat system 63 Facebook 65 Luxury car in 2010 (IVI) 100 Luxury car in 2016 (+ADAS) 150 Luxury car in 2020 (L3 autonomy) 300~ All Google services 2000 Million lines of code 22 © Arm 2017
Slide 23: Distributed sensors in a car
Distributed sensors in a car Lidar Cabin monitor camera Rear view camera 200 sensors will be Front view HD camera used in a car by 2020 Ultrasonic Long range radar Short range radar Short range radar Night vision infrared Biometric sensors Microphone Ultrasonic Laser headlights Short range radar 23
Slide 24: Human driving a car
Human driving a car Mirror Signal Manoeuvre 24 © Arm 2017
Slide 25: Computer driving a car
Computer driving a car Visual representation of what an autonomous vehicle sees by Google: Waymo Sense Decide Act Camera Object classification Brakes Path Planning Radar Sensor Models Steering Lidar Sensor Fusion Throttle GPS Environment Model Lighting Driving Policy V2X Scene Understanding Suspensi
Slide 26: Automotive compute in 2020
Automotive compute in 2020 Cockpit Connected Gateways ~50,000 DMIPS ~20,000 DMIPS Audio Visual, Maps, Traffic, Toll LTE 5G, WiFi, Bluetooth High-end smartphone payment, Google services connecting to CAN FD, LIN, Flexray, Body Electronics 30,000-50,000 DMIPS Rear entertainment, Voice recognition, Eth
Slide 27: Technology challenges
Technology challenges Autonomous Functional safety automotive requirements Securing everything 27 © Arm 2017
Slide 28: Timeline for autonomous driving
Timeline for autonomous driving 2016 2018 2020 2025 Advanced HIGHLY AUTOMATED AUTONOMOUS • Start of fully automated • Several control functions • All-round collision avoidance driving • Collision Avoidance Steering • Limited automated driving • High speed all-round collision (Low speed) • Ride shari
Slide 29: Financing the future
Financing the future 29 © Arm 2017
Slide 30: “Now is the time to be sowing, not harvesting”
Investment philosophy “Now is the time to be sowing, not harvesting” Rate of investment is discretionary and under Arm's control SoftBank has asked Arm to accelerate investments and to increase risk appetite All costs are expected to be financed from IP business’ revenue streams During this
Slide 31: Revenues, profits and profitability
Investment strategy Revenues, profits and profitability £1,400m Revenue Total Costs 45% Over the past 10 years Arm's IFRS EBIT IFRS Margin 40% revenues grew faster than costs £1,200m 35% £1,000m 30% In Q1 2017 £800m 25% • Revenues +2% 20% • Headcount +23% £600m 15% • Costs +94% £400m 10% • Profits -
Slide 32: Investing in people, infrastructure to create new products
Investing in people, infrastructure to create new products Costs were higher in Q1 2017 as Arm expands R&D capability £247m Future cost increases are expected to be £16m consistent with increases in headcount £12m £26m £21m £13m £32m £127m *Bonus accrual in Q1 2016 was small due to an adjustment in
Slide 33: Intangibles and Goodwill
Intangibles and Goodwill Amortisation of Intangibles Goodwill Arm’s intangibles have been valued at around Goodwill has been valued at around £5bn / $6.5bn / ¥700bn £18bn / $24bn / ¥2.7tn Amortised using a straight-line method over the Goodwill underpinned by Arm’s 10-year plan useful life of the as
Slide 34: The future starts today
The future starts What is HMP? today 34 © Arm 2017
Slide 35: Thank You
Thank You 35 © Arm 2017 Confidential © Arm 2017