This is the May 25, 2012 article for the EDACafe.com EDA Commentary. The article is entitled, “Electronics IP Industry – Q1 2012.”
Herein we return our attention to
the phenomenon of the rise of Intellectual Property (IP) in the world’s Electronics Industry, a segment of Electronic Design Automation (EDA) that Henke Associates began reporting on separately in 2003.
At the beginning, we covered eight (8) publicly-traded IP companies (called the "Group-of-8" or "G8"), as representative of the financial state of the nascent Electronics IP Industry. Subsequently, ARM absorbed Artisan Components in 2004; Mentor Graphics acquired LogicVision in 2009; and Synopsys bought Virage Logic in 2010. So nowadays, when we report on the Electronics IP Industry quarterly financials, the G5 listed below are included:
The Q2 2011 financial results of the G5 IP vendors were posted here on August 22, 2011, just at the beginning of a period of economic volatility that was precipitated by the US Government's debt ceiling debate in Washington DC and subsequent reduction of the USA’s credit rating by S&P from AAA to AA+.
The aforementioned continuing volatility in the economy was visible to anyone looking at the stock markets’ performances by the time of the posting of the Q3 2011 IP Industry Commentary on November 14, 2011. Below is a graph of the six months of the NASDAQ Composite leading up to November 14. Please note: (a) the relative stability of the Composite curve at just above the 2800 level for the initial months shown till late July 2011; (b) the steep plunge to below 2400 by mid-August 2011; (c) the relatively wild oscillations from mid-August 2011 through mid-November 2011; and (d) never closing at 2800 or above during the entire reporting period after mid-August 2011:
NASDAQ Close Nov 04 = 2686.15
52 week range = 2298.89 – 2887.75
Indeed, it was not until January 25, 2012 that the NASDAQ Composite finally closed above 2800 again, rising at an average slope of over 41 points per week for the four weeks between January 20 and February 17, 2012 as the US economy began to show consistent improvement.
The NASDAQ Composite had stabilized and began rising at a powerful upward slope, flirting with 3090.08 on March 21, 2012, closing at 3067.92 on March 23, 2012, having just closed at a high of 3078.32 on March 19, 2012.
The NASDAQ market then flattened out through mid-March and continued for the most part above 3000 until the index began some serious slipping in the period between May 04, 2012 and May 19, 2012:
The impact of this most recent overall market deterioration on the individual and collective IP G5 vendors’ Stock Prices and Market Caps will be presented at the conclusion of this IP Commentary.
G5 Electronics IP Vendor by Vendor Details – Q1 2012
Let’s first look at the
individual performances of each member of the Group of Five (a.k.a. the G5) Electronics IP players for nominal Q4 2012. Then we’ll follow up with a summary of the by-now-familiar Tables of Revenues and Profits of the entire G5 for Q1 2012 (and the four quarters leading up to Q1 2012), as well as some graphs of previous quarterly P&L’s.
On April 24, 2012 ARM Holdings plc announced its unaudited financial results for the first quarter ended March 31, 2012.
Progress on key growth drivers in Q1 2012
Growth in adoption of ARM ® processor technology
- 22 processor licenses signed across all target end markets
- 8 Cortex™‐A licenses signed, including licenses for Atlas and Cortex‐A15 for use in servers
- 10 Cortex‐M class licenses, including a further license for ARM’s smallest and lowest power Cortex‐M0+processor for use in next generation Internet of Things devices
Growth in shipments of chips based on ARM processor technology
- 1.1 billion chips shipped in mobile phones & mobile computers, ala a year ago
- 0.8 billion chips shipped in consumer & digital devices, up 15% year‐on‐year
Growth in outsourcing of new technology
- Physical IP: 3 Processor Optimization Pack licenses signed for Cortex‐A family processors, further increasing the royalty opportunity from high‐value chips in mobile computers, smart phones and automotive infotainment
- Graphics: 2 licenses signed for Mali™, taking advanced 3D graphics into low‐cost smart phones
ARM Revenue in IFRS in Q1 2012 was 132.5 million pounds, up 14.22% year over year compared to 116.0 million pounds in Q1 2011.
ARM Revenue in IFRS in Q1 2012 was $209.4 million, up 12.94% year over year compared to Q1 2011 of $185.5 million.
ARM Net Income in IFRS in Q1 2012 was 37.4 million pounds, up 73.4% year over year compared to 21.5 million pounds in Q1 2011.
ARM Net Income in IFRS in Q1 2012 was $59.09 million, up 11.33% year over year compared to $34.40 million in Q1 2011.
Warren East, Chief Executive Officer, said:
"As many aspects of our lives become digital, we continue to see an increase in the demand for ARM’s smarter and lower power technology, which is driving both our licensing and royalty revenues.”
“In the first quarter of 2012 we saw continuing demand for technology licenses driven by a remarkable variety of end markets from highly efficient servers to energy‐sipping sensors. ARM’s royalty revenues continued to outperform the overall semiconductor industry as our customers launch their products into new markets and gain market share within existing markets. With more customers choosing to deploy ARM technology in their products, this has been another quarter that underpins the long‐term growth opportunity of the business. This growth enables us to invest in future innovative technology as well as delivering increases in profit and cash flow.”