Annual Report and Accounts 2010

Non-financial KPIs

KPI

Building the base of licences that will drive future royalties

ARM’s royalty revenue opportunity is driven by the cumulative number of licences and partners utilising our technology.

Performance

ARM licenses

  • 06
  • +61
  • 07
  • +62
  • 08
  • +61
  • 09
  • +87
  • 10
  • +91
  • 743
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What happened in 2010?

More influential market leaders announced long term commitments to developing their roadmaps around ARM technology, including Freescale, Fujitsu, Microsoft, NVIDIA, Texas Instruments and Samsung. These agreements helped to drive revenues and backlog to their highest ever levels.

Highlights

743Cumulative royalty-bearing processor licences signed at end of 2010.

Future opportunities

ARM has good visibility of the licensing opportunity pipeline, with more market leaders looking to licence and deploy ARM technology in a broad range of end markets.

KPI

Growing the number of ARM processor- based chips

The royalty revenue generated from the sale of ARM processor-based chips is helping to drive our profitability.

Performance

Shipments of ARM processor-based chips bn

  • 06
  • 2.4
  • 07
  • 2.9
  • 08
  • 4.0
  • 09
  • 3.9
  • 10
  • 6.1
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What happened in 2010?

In 2010, the shipments of ARM processor-based chips grew by more than 50%, and royalty revenues grew by 40%, outperforming the industry which grew 23%.

Highlights

6.1bnOur partners reported shipping over six billion ARM processor-based chips in 2010.

Future opportunities

ARM expects unit shipments and royalty revenue to grow faster than the semiconductor industry as ARM continues to gain share.

KPI

Increasing the value that ARM gets for every mobile handset sold

A typical smartphone contains more ARM processor-based chips than a voice-only phone. As smartphone shipments have become a higher proportion of the overall handset market, so the average number of ARM processor-based chips per phone has increased.

Performance

Average ARM processor-based chips per phone

  • 06
  • 1.5
  • 07
  • 1.6
  • 08
  • 1.9
  • 09
  • 2.0
  • 10
  • 2.5
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What happened in 2010?

In 2010 smartphone shipments grew by more than 50%, driving the average number of ARM-based chips per handset to 2.5, an increase of about 25%.

Highlights

2.5Our partners reported shipping over six billion ARM processor-based chips in 2010.

Future opportunities

Smartphone shipments are expected to continue to increase. ARM technology continues to be incorporated into simpler phones.

KPI

Increasing ARM’s penetration in target end-markets

ARM estimates that the total addressable embedded chip market in 2010 amounted to 22 billion. Only three billion of those chips went into mobile phones, illustrating the much larger opportunity in consumer electronics, real-time processing and embedded computing.

Performance

Market penetration

Year Hard disk drives Digital
TVs
Micro controllers
06 40% 15% 1%
07 50% 20% 2%
08 55% 25% 4%
09 65% 30% 6%
10 85% 35% 10%
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What happened in 2010?

In 2010, ARM gained share in its target end-markets as major semiconductor companies increasingly deployed ARM processor-based chips.

Highlights

85%We now have 85% penetration in the hard disk drive market.

Future opportunities

ARM’s market share gain looks set to continue as more major semiconductor companies will start to ship their first ARM processor-based chips over the next few years.

KPI

Developing new technology to generate future royalty streams

ARM believes that we can provide the semiconductor industry with complementary technologies utilising the same business model; generating additional licence fees and more royalty streams.

Performance

Cumulative licences

Year Multimedia
licences
Physical IP
platforms
06 2 40
07 6 50
08 14 60
09 28 68
10 39 77
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What happened in 2010?

In 2010 we continued to see strong licensing for both our multimedia and physical IP technologies. Six semiconductor companies are now paying ARM multimedia royalties, and physical IP royalties accounted for 13% of total ARM royalty payments.

Highlights

77Cumulative royalty-bearing foundry platform physical IP licences by the end of 2010.

Future opportunities

ARM expects licensing and market share to continue to grow as more semiconductor companies bring their ARM technology-based products to market.

KPI

Investing in ARM’s product development capability and operational execution

Our people are our strength for designing the next generation of technology, and for growing and maintaining the ARM partnership.

Performance

Number of employees

Year Employees Engineers Percentage
06 1,659 1,049 63%
07 1,728 1,102 64%
08 1,740 1,071 62%
09 1,710 1,024 60%
10 1,889 1,191 63%
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What happened in 2010?

During 2010 ARM increased the engineering team by 15%, and kept the operational team broadly flat.

Highlights

63%Of our employees are engineers.

Future opportunities

ARM expects to continue to invest in its employees, and over the medium term, we expect that we will be able to grow our revenues faster than our costs.