ARM holds 2025 second quarter financial report meeting, V9 architecture continues to be a great success

On September 30, 2024, ARM held a second quarter earnings conference call for fiscal year 2025. The company's CEO Rene Haas said: "During this year, we have exceeded all expectations in executing our growth strategy. The ubiquitous demand for artificial intelligence is increasing the demand for ARM computing platforms. Since its inception, ARM chips have shipped more than 300 billion units."

Total revenue in the second quarter reached $844 million, exceeding expectations. Among them, royalty income was $514 million, a year-on-year increase of 23%, setting a record high, mainly driven by the continued adoption of the arm v9 architecture and the promotion of CSS (Compute Subsystems) technology. Rene explained: "The driving force behind the growth in royalty income is the increase in the value of each chip. In the past quarter, the arm v9 architecture accounted for 25% of royalty income, compared with only 10% a year ago."

The smartphone market performed strongly, with smartphone royalty revenue growing by 40%, significantly exceeding the 4% growth in smartphone shipments. This also shows that on the one hand, more and more mobile phones are choosing ARM, and on the other hand, the licensing fee for the V9 architecture is more expensive. Rene introduced that these include the iPhone 16, iPhone 16 Pro, and MTK's latest 9400, especially the Dimensity 9400, which is the first CSS shipped in the mobile field.

Speaking of CSS, Rene said that the number of CSS licenses has doubled in the past year. "ARM is the only computing platform that can run AI from the edge to the cloud." Rene emphasized.

For example, NVIDIA's Grace Blackwell integrates NVIDIA GPU Blackwell with the arm CPU in Grace. In addition, Microsoft Azure Cobalt and Google GCP Axion have chosen arm and officially shipped. "In the past quarter, arm and Meta cooperated to optimize Llama 3.2 using the arm Kleidi library, thereby achieving faster AI processing capabilities." Rene introduced.

Rene also said that in the automotive market, thanks to the application of ADAS and IVI, the arm v9 architecture is very suitable for edge AI scenarios.

"Without software, hardware is meaningless. With over 20 million software developers, we have the largest community of software developers in the world. We are working closely with important ecosystem partners such as GitHub, which recently announced the integration of arm tools into GitHub CoPilot, which is an important milestone for developers," said Rene. "The future is very bright, AI will be everywhere, and it will run on arm."

When talking about the lawsuit between ARM and Qualcomm, Rene said that the revenue forecast has taken into account the impact of possible failure to win the case, so the financial impact is limited.

Rene particularly emphasized that CSS has gained high recognition in the market by accelerating product time to market and enhancing design confidence.

Regarding AI PC, Rene said that ARM is very confident about the growth of the PC market in the next few years. "Now, whether it is related to AI demand or not, I think it is important that these PCs are equipped with enough performance to run AI applications. In terms of value proposition, it is too early to define AI PC. But we will not dwell on this. The cycle of technology and application should be that the initial technology should be far ahead of the application, and then the other way around."

Rene also introduced ATA (Arm Total Access), which provides a broad portfolio of IP products as well as manufacturing and tape-out rights. "In theory, I think most of our customer base can move to a version of ATA. The reason is that customers like the concept because it solves many problems. Second, giving their engineers access to a broad set of IPs allows them to do a lot of experiments and evaluations very easily. Third, they can now basically fix costs in the R&D push cycle because they know they will buy the IP anyway. At the same time, it means to Arm that it has a wider range of advantages because the churn rate of transactions is lower because they are more repeatable. In addition, by providing a wider portfolio of IPs, engineers will end up using more. I think the vast majority of our customer base will eventually move to a version of ATA. Given the wide range of IP sets used in ATA, I think this will increase patent royalties in the future," said Rene.

According to currently available information, Nordic, GigaDevice and Allwinner have all signed ATA licensing agreements.