Arm Limited

Roadshow Slides
Q2 2020v1© 2019 Arm Limited

Arm Limited is a subsidiary ofTechnology trends that will redefine all industries

Artificial Intelligence inevery device

Autonomousmachines

Augmentedreality

Security and Privacy
2© 2019 Arm Limited

Hyperscale cloudand connectivity

Arm defines the technology that will redefine all industries

Artificial Intelligencein every device

Mobile andConsumer

Networkingand Servers

Automotiveand Robotics

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Autonomous machines
Augmented reality
Hyperscale cloudand connectivity
3

Security and Privacy© 2019 Arm Limited

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Internet of ThingsArm introduction• Global leader in technology licensing• R&D outsourcing for semiconductor
companies• Innovative business model• Upfront licence fee – flexible licensing
models• Ongoing royalties on customer sales• Technology can be reused across multiple
applications• Long-term, secular growth markets
4© 2019 Arm Limited

Arm’s business model• Arm develops technology that is licensed to semiconductor companies• Arm receives an upfront license fee and a royalty on every chip that contains its technology
Business Development1) Arm licenses
technology tochip Partners

ArmTechnology
License FeeSemiCoPartner2) Partners develop
chips and shipthem to OEMs

Chip shipment

Per chip royalty

5© 2019 Arm Limited

Chip payment

OEMCustomer3) OEMs sell products
containing Arm-basedchips

Arm’s strategy• Maintain or gain share in long-term growth markets• From mobile phones to networking infrastructure and servers
to embedded smart devices and automotive• Increase value of Arm technology per smart device• Invest in developing more advanced processors with higher royalty rates• Physical IP and multimedia IP further increase Arm's value per chip
• Explore and exploit new opportunities in emerging applications
such as machine learning• Invest to create a sustainable business, fit for the long term
• Create superior returns by developing new technology thatwill deliver increased profits and cash generation in the future6© 2019 Arm Limited

Arm’s main growth markets
Mobile and Consumer$89bn
TAM 2029

 Smartphones, tablets and laptops
 Apps processor, modem, connectivity,

touchscreen and image sensors
 Growth coming from higher-value Armtechnology such as Arm v8-A, morecores per chip, multimedia

7© 2019 Arm Limited

Networking & Servers$67bn
TAM 2029

 Base stations, routers, switches, andEmbedded Markets$76bn
TAM 2029

 Automotive, white-goods, wearables,servers for cloud and data centres
smart devices in industrial and utilities Networks evolve to cope with increased  Microcontrollers, smartcards, embedded
data at lower latency: virtualisation,connectivity chips
integration and programmability
 Over 300 companies have licenced Arm Most major chip vendors haveprocessors for use in embedded
announced Arm-based products
computing devices

History of Arm
Joint venture between
Acorn Computers and Apple1990
8© 2019 Arm Limited

Designed into first mobilephones and then smartphones

1993 onwards

Now all electronic devices canuse smart Arm technology

TodayArm-based chip shipments~178bnArm-powered chips shipped (billions)25
20

Market share in 2019

15
10
50

9

Arm-based chips shipped to date34%

22.5bn 22.8bn

1991© 2019 Arm Limited

Calendar Years 2019

Licensing enables future royalties• Arm signed 97 processor licences in H1 2020

• Arm’s current royalty revenues are derived from licences signed many years ago• Growing base yields royalty revenues over long period+113+141+141+125+147+97

$500m
$400m
$300m

>30% of Arm’s most recent
licences are drivers offuture royalty revenue

$200m
$100m
$0m

2016
10

© 2019 Arm Limited~600 licences signed
since Q1 2016

$600m

20112015

19942010

Significant Royalty Potentialfrom Recent Licences

$700m

2017

2018

2019

YTD’20Financial YearsH1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
20092010

2011

2012
1994-2010

2013

2014

2011-2015

2015

2016

2017

2018

2019 20202016 to Present

Financial Years

Arm’s expanding opportunity
2019

MobileApplications
processor
Other mobile chips

Infrastructure

Networking
Data Center/CloudAutomotive

11© 2019 Arm Limited

2029
Market Value

Market Share

Market Value

90%

$41bn

$43bn

$10bn

$30bn
$13bn

40%
32%
5%

IVI and ADAS

75%

Other automotive
chips

10%

$17bn

$36bn

$20bn
$3bn
$7bn

$32bn

$20bn

$12bn
$10bn

Arm’s expanding opportunity
2019

Embedded

Other
Markets

Market Share

Market ValueController in
IoT Devices

90%

$4bn

Microcontrollers/SIM Cards

25%

$10bn

42%

$15bn

38%

$11bn

34%

$138bnConsumerElectronics
Other chips

Total MarketAll chips withprocessors

12© 2019 Arm Limited

2029
Market Value

$30bn
$16bn
$15bn
$33bn
$23bn

$232bnArm's current businessArm primary business is the development of intellectual
property (IP) blocks which are used in silicon chips
Our partners combine Arm IP with their own IP to create
complete chip designs
We earn license fees when we deliver Arm IP to ourpartners and royalties when our partners ship chips that
contain Arm IP
Highly profitable and cash generative enabling Arm toreinvest into new products
13© 2019 Arm Limited

Return on Investments – Arm v8-A case study• Arm incurs R&D costs many years before revenue starts

Research into
64-bit computing
started in 2000
Arm v8-A
Development starts

2008

142009© 2019 Arm Limited

Multiple processors
in development

First generationof processors
Architecturedevelopment andprocessor design

2010

2011

2012

2013

2014

2015

2016

2017

2018

Revenues, investments and profits• Until 2016 revenues grew fasterthan costs as Arm constrained
7,000
investment in R&D to enable
increasing profits
6,000$2,000m

8,000
Revenue$1,800m

Total Costs$1,600m

Adjusted EBITDA$1,400m

Headcount5,000$1,200m$1,000m

4,000

$800m

$400m
$200m
$0m

2010

2011

Fiscal years
15• From FY2019 Arm is matchinginvestment to revenue growth
2,000and expects revenue to growfaster than investments in the1,000
future leading to greater
profitability
0
3,000

$600m

© 2019 Arm Limited

2012

2013

2014

2015

2016

2017

2018

2019

• For FY2017 to FY2018 Arm grewinvestment faster than revenues

Arm Investor Relations Contact

Contact

Title

Ian Thornton

Head of Investor Relations

More content available on••

Arm’s website:
SoftBank Group’s website:16© 2019 Arm Limited

Contact+44 776 885 6503
ian.thornton@arm.com

arm.comgroup.softbank/en/ir