ARM Holdings plc Q2 and H1 2011 Results

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ARM Holdings plcQ4 and FY 2011 Results

31 January 2012London

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Cautionary Statement Concerning Forward-Looking Statements This presentation contains forward-looking statements as defined in section 102 of the Private

Securities Litigation Reform Act of 1995. These statements are subject to risk factors associated with the semiconductor and intellectual property businesses. When used in this document, the words “anticipates”, “may”, “can”, “believes”, “expects”, “projects”, “intends”, “likely”, similar expressions and any other statements that are not historical facts, in each case as they relate to ARM, its management or its businesses and financial performance and condition are intended to identify those assertions as forward-looking statements. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables, many of which are beyond our control. These variables could cause actual results or trends to differ materially and include, but are not limited to: failure to realize the benefits of our recent acquisitions, unforeseen liabilities arising from our recent acquisitions, price fluctuations, actual demand, the availability of software and operating systems compatible with our intellectual property, the continued demand for products including ARM’s intellectual property, delays in the design process or delays in a customer’s project that uses ARM’s technology, the success of our semiconductor partners, loss of market and industry competition, exchange and currency fluctuations, any future strategic investments or acquisitions, rapid technological change, regulatory developments, ARM’s ability to negotiate, structure, monitor and enforce agreements for the determination and payment of royalties, actual or potential litigation, changes in tax laws, interest rates and access to capital markets, political, economic and financial market conditions in various countries and regions, including the commercial credit environment and uncertainties arising out of the financial market and liquidity crises, and capital expenditure requirements. ARM does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

More information about potential factors that could affect ARM’s business and financial results is included in ARM’s Annual Report on Form 20-F for the fiscal year ended December 31, 2010 including (without limitation) under the captions, “Risk Factors” and “Operating and Financial Review and Prospects,” which is on file with the Securities and Exchange Commission (the “SEC”) and available at the SEC’s website at www.sec.gov.

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Business Update

Warren EastChief Executive Officer

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Major semiconductor companies continue to invest in ARM technology Lead Partners signed licenses for first ARMv8-A processors LSI becomes the 9th major semiconductor company to buy subscription license

ARM continues to outperform the semiconductor industry Increasing market share in our target markets Q4 saw strong growth in microcontrollers, smartcards and connectivity chips

Extension of outsourcing model gains traction 20nm physical IP platform, 3 POPs and 5 Mali graphics licenses

Delivering increased profits and cash 28% growth in earnings in Q4

Increasing theARM valueper product

Growth in applications

Extending IP Outsourcing

Q4 2011 Highlights

78%ProcessorDivision

11%Physical IP

Division

11%Dev. Sys.

& Services

Q4 Group Revenues

$217m

Growth Opportunities

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ARM in Mobile Computing Most mobile computers shown at CES

were based on ARM technology Wide range of form factors, software and

innovative features enabling OEMs to differentiate

All ARM-based mobile computers based on Cortex-A class processors Some with Mali, some with physical IP

NVIDIA, Qualcomm and TI demonstrated WoA tablets and laptops Microsoft announced beta availability will be

end of Feb

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ARM in Digital Consumer Products Most digital TVs shown at CES

were based on ARM technology Mobile computing ecosystem is becoming

available for home entertainment OEMs are innovating around a common

architecture bringing new services to the screen

Digital TVs with 3D graphics processors are beginning to ship – most based on ARM’s Mali graphics processor Expect >50m DTVs with graphics

processors to ship in 2012

Several TV application processors also implemented with ARM’s physical IP

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ARM’s Future in Computing Today’s ARM technology suitable for a range of computers Mobile computers announced at CES based on Cortex-A9 HP and Calxeda announce Cortex-A9 based server development First devices based on Cortex-A15 expected this year

Announced in Q4, ARMv8-A is the architecture for future generations of ARM processors Designed for computing requirements in 2014 and beyond Includes support for 64-bit processing and advanced cryptography Backward compatible with today’s Cortex-A family processors Four architecture licensees, including AppliedMicro and NVIDIA Two lead Partners signed for next generation processors

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Growing the Licensing Base

131 (+8)

95 (+9)

22 (+2)

Cumulative licenses(Q4 2011 licensing shown in parenthesis*)

Cortex-AFamily

Cortex-RFamily

Cortex-MFamily

Others = 21 (+1)*Note: Licensing numbers adjusted for licenses that are no longer expected to generate royalties

V8-A architectureFrom servers to smartphonesLead Partners signed up

Atlas / Apollo

Multi-core embedded processors for storage, baseband & engine management Lead Partner signed up

Cortex-R7

Smallest, lowest powerARM processorLead Partner signed up

Flycatcher

Processor Roadmap in 2012 Estimated Royalty Opportunity

for 2016

Real-timeEmbedded13bn unitsper year

Micro-controllers23bn unitsper year

ApplicationProcessors4bn unitsper year

ARM7TM

Family

ARM11TM

Family 79

171

270ARM9TM

Family

58 (+5) MaliGraphics Mobile computing, phones and

consumer electronicsLead Partners signed up

Skrymir / Tyr

31%Group $revs

9

$0m

$50m

$100m

$150m

$200m

$250m

$300m

$350m

$400m

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2011

2006-10

2001-05

Pre-2001

Licensing Drives Future Royalties Many Q4 licenses for a broad range of end markets 9 of the 25 agreements with semiconductor companies intending to use

ARM technology across both mobile and digital TV / set-top-box LSI signed a subscription license to gain access to ARM processor

portfolio for a broad range of enterprise applications 5 Mali licenses signed for use in mobile phones, mobile computing and

digital TV

~100 Licenses

~280 Licenses

~350Licenses

Significant Royalty Potential from Recent Licenses

~120Licenses

Processor Licenses

+62

+61

+87

+91

2006 2007 2008 2009 2010 2011

~850

+121

+66

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Q4 royalty revenues over $100m Up 23% year-on-year, industry up 6%

2.2 billion units in Q4 Up 26% year-on-year, industry flat 1.2 billion chips reported as sold into

mobile phones and tablets Mobile units up 10%, mobile value up

20% due to Cortex-A and Mali 550m microcontrollers and smartcards

up 80% year on year, from 20 vendors

Processor Royalties

Non-mobile 45%

46%Q4 Group $revs

2011: ARM Outperforms Industry

Grow

th Rate (%

)

AR

M R

oyal

ty R

even

ue ($

M)

2011 royalty revenue up 22% Industry up 8% over the relevant period

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0

50

100

150

200

250

300

350

400

2007 2008 2009 2010 2011

ARM Royalty Revenue

Industry Growth Rate*

ARM Growth Rate

ARM $ Royalty CAGR (07-11) = 19%Industry $ Revenue CAGR (07-11) = 4%

Source: SIA January 2012, excludes memory and analogIndustry data offset 1 quarter to align with ARM’s royalty revenue

Mobile55%

Embedded25%

Enterprise16%

Home4%

Q4 Market Analysis

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7.9 Billion ARM-Based Chips in 2011

2011 to 2016 in the Appendix

Asus Eepad Transformer

Western DigitalMy Passport disk drives

HP Photosmart Printer

BluetoothHeadsets

WiFiRouters

Audi A8 (2012)Infotainment

BraunCoffee Machine

Embedded LabsIndustrial Network Server

VerifoneCash Terminal

HTCSensation

SteelseriesSensei Mouse

Bernina 830Sewing Machine

LiveScribeSmartpen

Recon Goggles Heads Up Display

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Smarter Technology Beyond GadgetsARM technology is being used to make the world a better place

Improving EducationLiteracy Bridge provides talking books to people who otherwise would not be able to access information as a result of illiteracy, disability or poor infrastructure

Improving Server EfficiencyHP's Redstone Server Development Platform features extreme low-energy server processors that can reduce power consumption by about 90%

Improving HealthcareAT&T are developing a health and safety monitoring device. This would be a small wearable device allowing real time monitoring of patient activity, location and vital body sensors

Improving Energy-Use in the HomeSmarter electric motors could reduce global emissions by 6%1

Smart meters can reduce domestic energy bills by 5-15%2

Sou

rces

1. I

EA

2.

Env

ironm

enta

l Cha

nge

Inst

itute

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Physical IP Benefits Processors Royalty-bearing foundry platform licenses

drive long-term revenue TSMC, Samsung and IBM have all now licensed

20nm platforms 91 cumulative physical IP foundry licenses First 32nm royalty revenue received

Advanced Physical IP is complex and benefits from SoC design expertise Processor Optimisation Pack (POP) is optimised

physical IP for processors delivering higher-performance and lower-power 3 POPs licensed in Q4, 26 POPs signed to date 50% attach rate with Cortex-A family processors First royalty revenue received from POP based

chip

11%Q4 Group $revs

Advanced physical IP forleading foundries

32nm*Royalties Received

20/14nmIn Development

28nmDelivered to lead partners

*32nm developed for GLOBALFOUNDRIES, IBM and Samsung

0

5

10

15

20

25

30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2010 2011

Cumulative ProcessorOptimisation Packs

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Summary Strong license revenues driven by increase in new product development

and leading companies making long-term commitments to ARM technology Shipments of ARM-based chips continue to outperform the industry as new

chip designs come to market Mali and physical IP can generate additional royalty revenue per chip ARM is investing in new technology whilst increasing revenues,

profits and cash

Investor and analyst presentationTuesday 28 February, 16:30

Warren East, CEOLaurence Bryant, Director of Mobile

Solutions

Invitation on IR website www.arm.com/ir

Mobile World Congress

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Financial Update

Tim ScoreChief Financial Officer

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Financial Highlights – Q4 2011 Very strong processor licensing quarter Record license revenues of $68m 25 processor licenses signed Order backlog up over 20% sequentially to record high Opportunity pipeline healthy for 2012

Exceptionally strong royalty quarter Q4 processor shipments up 19% sequentially Market share gains, Japan’s recovery to full production Some royalty payments in Q4 were driven by large orders

that are unlikely to be repeated in Q1

Margin expansion and increased investment Record margins at 48% in Q4, 45% for FY

Backlog is up > 2x over 2 years

Q409 Q411

+26%

FlatIndustry ARM

Q4 YoY unit shipment growth

Operating marginexpansion

FY10 FY11

40% 45%

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Financial Highlights – FY 2011 Another year of strong growth in 2011 ARM outperformed industry both through the downturn

and the recovery

New and existing customers investing in advanced ARM technology 121 processor licenses 6 physical IP platform licenses

ARM continuing to invest in new technology Headcount up by 227 in 2011 to 2,116 About 80% of new hires in research and development More investment in R&D in 2012

Margin expansion drives strong cash generation Dividend increased by 20%

+24%

8%

Industry ARM

USD Revenue growth in 2011

179

227

2010

1889

2011

2116

1762

Headcount growthabout 10% CAGRfor past 2 years

Full Year Dividend

2010 2011

2.90p3.48p

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Outlook ARM entered 2012 with: A robust opportunity pipeline and a record order backlog New product introductions and growing new markets Increasing market share in target markets

Q1 Outlook About 10% sequential decline in the semiconductor industry in Q4 Expect revenues for Q1 to be in line with current market expectations

of around $200 million Normalised Opex expected to be £64-66 million

FY 2012 Global macro-economic situation remains uncertain and may

influence consumer and enterprise spending Assuming the macroeconomic situation does not deteriorate

significantly, we expect revenues to be at least in line with current market expectations of just over $860 million

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Q&A

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Mob

ileMarkets for ARM in 2010: Restated

* Including tablets, netbooks and laptops * * Includes other applications not listed such as headsets, DVD, game consoles, etc

Non

-Mob

ile

Devices Shipped(Million of Units)

2010Devices

Chips/Device

TAM 2010Chips

2010 ARM

2010 Share

Smart Phone 280 2-5 1,200 1,100 90%

Feature Phone 760 1-3 1,900 1,700 90%

Low End Voice 570 1 570 540 95%

Portable Media Players 150 1-3 300 220 70%

Mobile Computing* (apps only) 230 1 230 25 10%

Desktop PCs & Servers (apps) 220 1 220 0 0%

Digital Camera 130 1-2 200 160 80%

Digital TV & Set-top-box 350 1-2 450 160 35%

Networking 670 1-2 750 185 25%

Printers 120 1 120 75 65%

Hard Disk & Solid State Drives 670 1 670 560 85%

Automotive 2,700 1 2,700 180 7%

Smart Card 6,100 1 6,100 330 5%

Microcontrollers 7,300 1 7,300 560 8%

Others ** 1,700 1 1,800 270 15%

Total 22,000 24,500 6,100 25%

Source: Gartner, InStat, SIA, and ARM estimates

Updated embedded forecast due to Gartner retrospectively increasing the numberof chips classified as Automotive, MCU, and Smartcards

2010 forecast was:

Auto:1,800 / 180 / 10%S.C: 5,400 / 330 / 6%MCU:5,800 / 560 / 10%

Previous Total: 19b / 22b / 6.1bn / 28%

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Mob

ileMarkets for ARM in 2011



2011Devices

Chips/Device

TAM 2011Chips

2011 ARM

2011Share

Smart Phone 470 3-5 1,900 1,700 90%

Feature Phone 660 2-3 1,700 1,600 95%

Low End Voice 690 1-2 700 650 95%

Portable Media Players 140 1-3 280 230 85%

Mobile Computing* (apps only) 280 1 280 60 20%

Digital Camera 150 1-2 220 190 80%

Digital TV & Set-top-box 400 1-2 600 230 40%

Desktop PCs & Servers (apps) 220 1 220 0 0%

Networking 680 1-2 750 300 30%

Printers 100 1 100 65 65%

Hard Disk & Solid State Drives 700 1 700 630 90%

Automotive 2,700 1 2,700 180 7%

Smart Card 6,300 1 6,300 700 10%

Microcontrollers 7,800 1 7,800 1,100 15%

Others ** 2,000 1 2,000 300 15%

Total 23,000 26,000 7,900 30%

Hom

eEn

terp

rise

Embe

dded


Year Market Share

2007 17%

2008 20%

2009 22%

2010 25%

2011 30%

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Mob

ileMarkets for ARM in 2016



2016Devices

DeviceCAGR

Chips/Device

2016 Chips

ChipCAGR

Smart Phone 1,300 23% 3-5 4,500 19%

Feature Phone 400 -10% 2-4 1,200 -7%

Low End Voice 740 1% 1-2 1,100 9%

Portable Media Players 110 -5% 1-3 350 5%

Mobile Computing* (apps only) 850 25% 1 850 25%

Digital Camera 180 4% 1-2 350 10%

Digital TV & Set-top-box 600 8% 1-4 1,800 25%

Desktop PCs & Servers (apps) 240 2% 1 240 2%

Networking 790 3% 1-2 1,600 16%

Printers 120 4% 1-3 240 19%

Hard Disk & Solid State Drives 1,000 7% 1 1,000 7%

Automotive 3,500 7% 1 3,500 7%

Smart Card 8,000 5% 1 8,000 5%

Microcontrollers 11,500 8% 1 11,500 8%

Others ** 2,900 8% 1-2 3,200 10%

Total 32,000 6% 40,000 9%

Hom

eEn

terp

rise

Embe

dded

Key Growth Areas for ARM


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Q1 2011

Licensing Increases Market Opportunity

Application Penetration of Key Companies’ Products

2011ShareShipments

Smartphone – Apps >95%

Mobile Computer – Apps* 20%

Mobile – Modems 100%

Mobile – BT 80%

Mobile – WiFi 70%

Digital Camera** 80%

Digital TV / Set-Top-Box 40%

Networking 30%

Printers** 65%

Disk Drives (HDD & SSD) 90%

Automotive 7%

Smart Card 10%

Microcontrollers 15%

3D Graphics <1%

Public ARM design wins, but not yet shipping

Shipping mainly ARM-based chips

Shipping some ARM-based chips

No ARM design win or not yet public

* Includes handheld computers, tablets, and laptops**Based on OEM market share rather than semiconductor vendor

ARM gains share by winning designs at leading semiconductor companies

Based on current market sharesand ARM’s view of how these markets may develop.ARM will update the chart on the left only as design wins become public

3 companies re-equipped

1 company re-equipped

2 new design wins

Q2 2011 2 companies re-equipped

Q3 2011 1 company re-equipped

Q4 20113 companies re-equipped

1 company re-equipped

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Backlog Analysis – End Q4 2011

Backlog by Maturity Profile Backlog Composition

25%

23%

52%

Q112/Q212 Q312/Q412 Q113+

74%

13%

13%

ProcessorsPhysical IPSupport, Maintenance & Other

25

0%

25%

50%

75%

100%

2007 2008 2009 2010 2011

% o

f $ R

even

ues

Services Development SystemsPIPD Licensing PD LicensingPIPD Royalties PD Royalties

Revenue Split Analysis6%

52%

36%

7%5%

Royalties

Licensing

40%

43%

11%

ARM Holdings plc Q2 and H1 2011 Results

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