ARM technology pervasiveness will continue to give rise to increasing cash generation

Smart technology is increasingly being used to connect us together, to make our societies more sustainable and to make life easier and simpler for everyone. ARM’s technology has been created to meet these market requirements and our business model ensures that the leading companies in these end-markets have access to ARM’s latest products.

These trends are making ARM technology more pervasive and applicable to more end-markets. Mature markets where ARM technology is already well penetrated are still opportunities as the number of ARM- based chips can increase per device, and the royalty revenue generated from the sale of each digital consumer device therefore increases. New markets are emerging all the time, and ARM’s business model has ensured that the most innovative companies for these new markets are already equipped with ARM technology.

These trends are likely to continue beyond the next five years and well into the future. Today, ARM is already planning for this future, by investing in R& D with three new processors planned to be launched in 2010 and investing in strengthening the connected community with new software and tools.

ARM’s technology is broadly applicable across a wide range of end-markets and everything we design can be licensed to multiple companies and they can integrate that design into numerous product lines, each generating another layer of royalty. Our R&D investment is therefore less than the growing revenue opportunity as more Partners adopt ARM technology in their product lines. This operational leverage is expected to make ARM increasingly profitable and cash generative as we move forward.