Post on 10-Dec-2020
© 2019 Arm Limited
Arm LimitedRoadshow Slides
Q2 2020
v1 Arm Limited is a subsidiary of
2 © 2019 Arm Limited
Security and Privacy
Autonomousmachines
Technology trends that will redefine all industries
Hyperscale cloud and connectivity
Artificial Intelligence in every device
Augmentedreality
3 © 2019 Arm Limited
Arm defines the technology that will redefine all industries
Mobile and Consumer
Networkingand Servers
Automotiveand Robotics
Internet of Things
Artificial Intelligencein every device
Autonomous machines
Augmented reality
Hyperscale cloud and connectivity
Security and Privacy
4 © 2019 Arm Limited
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 customer sales• Technology can be reused across multiple
applications
• Long-term, secular growth markets
5 © 2019 Arm Limited
Chip shipment
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 technology to chip Partners
2) Partners developchips and shipthem to OEMs
3) OEMs sell productscontaining Arm-based chips
Per chip royalty
License Fee
TechnologyArm SemiCo
Partner
OEMCustomer
Chip payment
6 © 2019 Arm Limited
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• Physical IP and multimedia IP further increase Arm's value per chip
• Explore and exploit new opportunities in emerging applicationssuch as machine learning
• Invest to create a sustainable business, fit for the long term• Create superior returns by developing new technology that
will deliver increased profits and cash generation in the future
7 © 2019 Arm Limited
Networking & Servers
Base stations, routers, switches, and servers for cloud and data centres
Networks evolve to cope with increased data at lower latency: virtualisation, integration and programmability
Most major chip vendors haveannounced Arm-based products
Smartphones, tablets and laptops Apps processor, modem, connectivity,
touchscreen and image sensors Growth coming from higher-value Arm
technology such as Arm v8-A, more cores per chip, multimedia
Mobile and Consumer
Arm’s main growth markets
Embedded Markets
Automotive, white-goods, wearables, smart devices in industrial and utilities
Microcontrollers, smartcards, embedded connectivity chips
Over 300 companies have licenced Arm processors for use in embedded computing devices
$89bnTAM 2029
$76bnTAM 2029
$67bnTAM 2029
8 © 2019 Arm Limited
History of ArmJoint venture between
Acorn Computers and Apple
1990
Designed into first mobile phones and then smartphones
1993 onwards
Now all electronic devices canuse smart Arm technology
Today
9 © 2019 Arm Limited
Arm-based chip shipments
0
5
10
15
20
25
1991 2019
Arm
-pow
ered
chi
ps sh
ippe
d (b
illio
ns) 22.8bn34%
Market share in 2019
~178bnArm-based chips shipped to date
22.5bn
Calendar Years
10 © 2019 Arm Limited
$0m
$100m
$200m
$300m
$400m
$500m
$600m
$700m
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1994-2010 2011-2015 2016 to Present
Licensing enables future royalties• Arm signed 97 processor licences in H1 2020
• Arm’s current royalty revenues are derived from licences signed many years ago
• Growing base yields royalty revenues over long period
>30% of Arm’s most recent licences are drivers of future royalty revenue
+113
+141+141
+125+147
Financial Years
2016 2017 2018 2019 YTD’20
+97
Financial Years
1994-2010
2011-2015
Significant Royalty Potential from Recent Licences
~600 licences signed since Q1 2016
11 © 2019 Arm Limited
Arm’s expanding opportunity
Mobile
Automotive
Infrastructure
Market Share Market Value Market Value
40% $30bn
$20bn
2019
Other mobile chips
Applicationsprocessor
75%
32%
90%
$10bn
$17bn
$20bn
$3bn
$7bn
5%
10%
2029
$36bn
Other automotivechips
IVI and ADAS
Data Center/Cloud
Networking
$43bn
$13bn
$32bn
$12bn
$10bn
$41bn
12 © 2019 Arm Limited
Arm’s expanding opportunity
Embedded
Total Market
OtherMarkets
Market Share Market Value Market Value
2019
Microcontrollers/SIM Cards
25% $10bn
$15bn
$11bn38%
2029
All chips withprocessors
Other chips
ConsumerElectronics $33bn
$15bn
$30bnController in IoT Devices $4bn90%
$16bn
$23bn
$138bn34%$232bn
42%
13 © 2019 Arm Limited
Arm's current business
Arm primary business is the development of 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 chips that contain Arm IP
Highly profitable and cash generative enabling Arm to reinvest into new products
14 © 2019 Arm Limited
Return on Investments – Arm v8-A case study • Arm incurs R&D costs many years before revenue starts
Research into64-bit computing
started in 2000
Multiple processorsin development
Arm v8-ADevelopment starts
First generationof processors
Architecturedevelopment andprocessor design
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
15 © 2019 Arm Limited
Revenues, investments and profits• Until 2016 revenues grew faster
than costs as Arm constrained investment in R&D to enable increasing profits
• For FY2017 to FY2018 Arm grew investment faster than revenues
• From FY2019 Arm is matching investment to revenue growth and expects revenue to grow faster than investments in the future leading to greater profitability
Fiscal years
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
$0m
$200m
$400m
$600m
$800m
$1,000m
$1,200m
$1,400m
$1,600m
$1,800m
$2,000m
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Revenue
Total Costs
Adjusted EBITDA
Headcount
16 © 2019 Arm Limited
Arm Investor Relations Contact
Contact Title Contact
Ian Thornton Head of Investor Relations +44 776 885 6503ian.thornton@arm.com
More content available on • Arm’s website: arm.com• SoftBank Group’s website: group.softbank/en/ir