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ARM at a glance

Licensing

ARM is building a base of licences that will deliver long-term royalty growth.

Number of licences 2005-2009

Number of licences 2005-2009* Adjusted for licences that are no longer expected to generate royalties.

In 2009, we signed a record 87 licences. This takes the licensing base to more than 660 licences that represent potential future streams of royalty revenue.

infographic

Semiconductor companies bought these licences to use ARM technology in a broad range of end-markets.

The strong licensing in 2009 was driven by:

  • ARM customers continuing to invest in R&D programme.
  • ARM introducing three new processor products, taking ARM into new markets.
  • ARM mainstream products being deployed to a broadening range of applications.

The future opportunity

Opportunity pipeline

  • Opportunity pipeline for 2010 has a broad range of quality companies looking to start new ARM-based programmes.
  • There is always a risk of licensing deferral in any quarter, but this risk is returning to normal levels.

New products and new markets

  • ARM is introducing at least three new processors in 2010, taking ARM technology into more new applications.
  • Consumer electronics continue to require smarter chips, making ARM technology applicable to more end-markets.

Mobile

ARM is growing the value we receive from every mobile phone shipped.

ARM-based chips can be found in the majority of the phones sold in 2009. The smarter the phone, the more ARM-based chips it is likely to contain and the more revenue ARM receives per phone. In 2009, as the mix of phones included a higher proportion of smartphones, the number of ARM-based chips per mobile phone rose to an average of 2.1, and the value ARM receives per mobile phone also increased.

Growth in ARM royalty revenue per mobile phone handset* %

Growth in ARM royalty revenue per mobile phone handset* %*As a proportion of handset average sales price compared to 2004.

Mobile computing is a rapidly growing market with new products being introduced such as netbooks, e-books, smartbooks and internet tablets.

Semiconductor manufacturers have announced chips based on ARM technology for this new market.

Software developers have launched operating systems, browsers and plug-ins bringing a PC-class experience to ARM-based chips. For example, Adobe has announced Flash 10 support for ARM technology and Mozilla have announced the Firefox browser for ARM.

Computer manufacturers have developed advanced handsets and mobile computers utilising ARM technology including Dell, Google, Lenovo, HP and Sharp.

The future opportunity

More smartphones and smarter smartphones

  • As the mix shift in the mobile phone market increasingly moves towards the smartphone, and as smartphones get smarter, then ARM’s revenue per phone will continue to increase.

Basic phones are getting smarter too

  • High volume phones are also becoming more capable – they become more connected with Bluetooth and WiFi – and their functionality improves with better cameras and multimedia.

Smartphones are evolving into mobile computers

  • More ARM-based mobile computers will be announced in 2010 and will be always-on, always connected so you can take the internet with you everywhere.

Non-mobile

ARM is growing share in non-mobile markets such as digital TVs, hard disk drives (HDD) and microcontrollers.

ARM is growing share in non-mobile markets such as digital TVs, hard disk drives (HDD) and microcontrollers.

ARM technology is becoming increasingly applicable in a broad range of end-markets including:

Hard disk drives

65%
market share
in 2009 Up from 55% in 2008

Leading HDD manufacturers are using ARM technology as disk capacity and density increases and so the chips controlling the disks need to become smarter to read the data off the disk.


Digital TV and set-top box 30

30%
market share
in 2009 Up from 25% in 2008

ARM-based chips are used to decode the TV signal, improve image quality, and to display and control the electronic programme guide. High-end digital TVs are also using ARM technology to connect to the internet and to become a PC in your living room.


Microcontrollers

6%
market share
in 2009 Up from 4% in 2008

Consumers are demanding more efficient and more capable electronic products from white goods to cars to heating and lighting.ARM is well positioned to be the universal platform used in smart chips for all these electronic products.


The future opportunity

Hard disk drives

  • All leading HDD manufacturers have ARM-based product lines, and are looking to use ARM technology in their future designs. The hard disk drive could be the next market where ARM achieves a market penetration of over 80%.

Digital TVs

  • As digital TVs become internet-connected, they can adopt the ARM architecture to take advantage of the ecosystem of software already available for ARM.

Microcontrollers

  • ARM’s market share gains look set to continue with many leading microcontroller manufacturers announcing new ARM-based product lines.

Beyond processors

ARM is investing in technologies that will support a similar business model to processors, i.e. an upfront licence fee and an on-going royalty stream.

Physical IP

ARM develops physical IP for leading semiconductor companies. During 2009 we demonstrated the first ARM processor manufactured at 32nm, started delivering 32nm technology to customers and signed up leading foundry and fabless semiconductor companies for the next generation of ARM’s physical IP.

Video and graphics IP

ARM develops video engines and graphics processors to be integrated alongside an ARM processor in a chip – generating an additional royalty stream from each chip.

Video and graphics IP
Number of
licences in 2009
Base of licences
by end of 2009
Royalties in 2009
Physical IP 8* 68* Twelve of the top 20 semiconductor companies used physical IP in their chips driving royalties through the foundries.
Video and graphics IP 13 26 Four leading semiconductor manufacturers paid royalties on ARM video and graphics IP.
* Physical IP licences refer only to royalty generating platform licences.

The future opportunity

Physical IP

  • During 2010 ARM will continue to develop the roadmap of 32/28nm physical IP components. We expect lead customers to manufacture their first chips at 32nm in 2010, with royalties starting in 2011.

Video and graphics IP

  • During 2010 ARM will introduce new multimedia technology for licensing and we expect more semiconductor companies to start shipping chips based on ARM’s video and graphics technology into smartphones, mobile computers, digital TVs and other consumer electronic applications.