Increasing the royalty revenue opportunity per chip
During the quarter, 13 companies reported that they had shipped a total of 215 million ARMv8-A based chips. Of these about 70 million chips contained a high number of cores, utilising by ARM big.LITTLE technology. These will be deployed in smartphones, tablets, other consumer electronic devices, enterprise networking and servers.
Shipments of chips containing an ARM Mali graphics processor were consistent with the higher end of our previously guided range of 600m to 700m units in FY15. Most Mali graphics processors are found in chips containing an ARM Cortex-A class processor, increasing the royalty percentage per chip.
ARM’s physical IP dollar royalty revenue in Q3 2015 was up 18% year-on-year, with about one third of royalty revenues generated from wafers manufactured at advanced nodes from 28nm to 14/16nm.
At 30 September 2015, ARM had 3,853 full-time employees, a net increase of 559 since the start of the year, being mainly engineers joining ARM’s processor R&D teams. At the end of Q3 the Group had 1,530 employees based in the UK, 854 in the US, 613 in EMEA, 541 in India and 315 in the Asia Pacific region.
In July 2015, ARM announced the acquisition of Sansa Security (Sansa), a provider of hardware security IP and software for advanced system-on-chip components deployed in Internet of Things and mobile devices. The company currently enables security in more than 150 million products a year and Sansa technology is deployed across a range of smart connected devices and enterprise systems. The deal complements the ARM security portfolio, which includes ARM TrustZone® technology and SecurCore® processor IP.
In October 2015, ARM announced the acquisition of the product portfolio and other business assets of Carbon Design Systems (Carbon), a leading supplier of cycle-accurate virtual prototyping solutions, to deliver design optimization, time-to-market and cost-efficiency gains for its Partners. As part of this acquisition, Carbon’s staff will transfer to ARM.
Principal risks and uncertainties
The principal risks and uncertainties faced by the Group in 2015 are included within the “Risks and risk management” section of the 2014 Annual Report and Accounts filed with Companies House in the UK. Details of other risks and uncertainties faced by the Group are noted within the Annual Report on Form 20-F for the year ended 31 December 2014 which is on file with the Securities and Exchange Commission (the “SEC”) and is available on the SEC’s website at
www.sec.gov. There have been no changes to these risks that are expected to materially impact the Group. These risks include but are not limited to: ARM's quarterly results may fluctuate significantly and be unpredictable which could adversely affect the market price of ARM ordinary shares; general economic conditions may reduce ARM's revenues and harm its business; we depend largely on a small number of customers and products; failure by ARM to achieve the performance under a licence or failure of a customer to make an obligated milestone payment could materially impact our revenues; we operate in an intensely competitive industry and our customers may choose to use their own or competing technology; ARM has grown its operations significantly over recent years and ARM’s business could be adversely impacted if these changes are not managed successfully; ARM's technology is used in a wide range of electronic products, any bug or fault in our technology could lead to significant damage to our brand and reputation; ARM may have to protect its intellectual property or defend the technology against claims that we have infringed others’ proprietary rights; and an infringement claim against ARM’s technology may result in a significant damages award which would adversely impact ARM’s operating results.
Sarah West/Ben Fry
+44 (0)207 404 5959
Ian Thornton/Phil Sparks
ARM Holdings plc
+44 (0)1628 427800