Royalties make bigger contribution to ARM revenues

Royalties make bigger contribution to ARM revenues
By Peter Clarke, EE Times
February 2, 1999 (1:16 p.m. EST)
URL: http://www.eetimes.com/story/OEG19990202S0003

CAMBRIDGE, England — Revenues for ARM Holdings plc grew 59 percent and profits doubled for the year ended December 31, its first as a publicly traded company.

ARM, which licenses designs of RISC microprocessors and associated peripherals to semiconductor manufacturing "partners" rather than make and sell chips itself, saw revenues rise to about $69 million compared with about $44 million in 1997. Profit before tax rose 108 percent from about $7.5 million in 1997 to $15.5 million in 1998.

"During the year volume shipment of products based on the ARM architecture increased from less than 10 million in 1997 to an estimated 50 million in 1998," said Robin Saxby, chairman, president and chief executive officer of ARM (Cambridge, England). "This is a tribute to the effort and success of our partners." ARM's semiconductor licensees now number over 30, and 14 were shipping products in 1998, compared with eight in 1997, Saxby said.

Pete Magowan, ARM vice president for Europe, said that the big growth in shipments meant that unit royalties were now making a bigger contribution to ARM's revenues, although he declined to give a breakdown of the numbers. In the past, the initial license fees paid by semiconductor partners or fees paid for the licencing of a new core have tended to dominate ARM's revenue, often standing at around 60 percent of the total, with unit royalties comprising around 10 percent, Magowan said.

In addition, sales of development systems and software tool kits more than doubled in 1998 from the previous year. "That's the real barometer of the business," said Magowan, as it indicates increased design activity and a future stream of royalties revenues.

"Despite the general economic uncertainty, 1999 has started well with four further license agreements reached — one new agreement for the ARM7TDMI and three agreements with existing partners for the ARM9 family," Saxby said. "We plan a year of continue d growth and progress in all areas."

The new ARM7TDMI licensee is Toshiba Corp. Magowan said seven companies have now licensed the ARM9, and identified VLSI Technology Inc., Cirrus Logic Inc., Symbios, Rockwell and Lucent Technologies as licensees, adding that the others prefer to remain anonymous.

ARM's employee numbers grew from 274 at the end of 1997 to 354 at the end of 1998, and ARM opened several new offices and expanded existing facilities during the year. Its current and planned additions are estimated to allow employment to expand to 650 staff worldwide in the medium term, the company said.

ARM's shares are traded on the London Stock Exchange and American Depository Shares, representing three shares, are traded on NASDAQ.