ARM Signs 48 New Licenses in Q3

ARM announced their quarterly results early this morning. ARM’s results are a funny mixture of backward looking information such as royalties which are reported a quarter late since they have to wait for their licensees to work out how many they shipped, and some very forward looking such as new licenses, which bring some current revenue but are also setting up a future revenue stream at least a few quarters out.

On the licensing front, which is perhaps the best indication of how rosy the future of ARM is, they had a record number of new licenses at 48. Previously the record wasn’t even close, in the mid 30s. Perhaps even more importantly, 11 of these new licensees were new companies taking out their first ARM license. Who are they? There are 14 licensees to mobile and computing applications including entry level smartphones, tablets and 2-in-1 laptops. 18 liceenses for microcontrollers and sensors for the internet of things applications, 7 licensees for wide wireless enterprise networking and 9 licensees for other consumer electronic applications such as digital TVs. One especially large multi-license deal was with MediaTak (who power a lot of low-cost Chinese smartphones).

On the 64 bit front, which was such a big deal at the Linley conference last week, AMD, Broca, Mali, announced ARM-based chips that support 64-bit for mobile infrastructure and enterprise networking applications. Included in the new licensees were further four Cortex-A50 series processors which includes above 64-bit computing. To date ARM has now signed 24 Cortex-A50 series licensees.

On the royalty front, ARM continues to outperform the semiconductor industry and despite the industry being down 2% year-on-year in the relative period, ARM royalty revenue was up by 14%. You see this in TSMC’s numbers too, that reflect the relative strength of the fabless ecosystem compared to traditional IDMs. These are royalties based on what how many cores were shipped in Q2.

Just how many? 2.5 billion. Presumably even more in Q3.

Of course a lot of these are in mobile. But not as many as you think. As Simon Segars said on the conference call:”Shipments of embedded ARM based chips well are particularly strong and non-mobile chip shipments now account to more than half of ARM’s total royalty shipments.”

And how are ARM doing in the server/networking space, which as traditionally been a MIPS/PowerPC/Intel stronghold? ARM is also beginning to see traction of shipments in enterprise networking applications as the first of the early adopters start to ramp into high volume. More than 15 million Cortex-A enterprise networking chips were reported in Q3.

I’m not that interested in the quarterly revenue numbers, compared to this more qualitative data on industry dynamics. But for the record, revenue was $287M up 26%. Processor licensing revenue was up over 50% year on year.

Transcript of the conference call at Seeking Alpha is here.

Next week it is ARM TechCon at the Santa Clara Convention Center from October 29-31. 5000 people are expected. More information is here. I’ll see you there. Here is Simon Segars previewing ARM TechCon:

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