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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Moving on to ARM, which has come from what was

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Speaker 2: in the red pre market training to a higher three

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Speaker 2: and a half percent.

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Speaker 3: Now this is they too.

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Speaker 2: Really managed to beat out the gate when it comes

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Speaker 2: to the both the top and bottom line.

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Speaker 3: The company's revenue forecast was a bit of.

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Speaker 2: A concern nine hundred and twenty million to nine hundred

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Speaker 2: and seventy million, which.

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Speaker 3: Perhaps just fell short of some expectations.

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Speaker 2: But they really are maintaining their annual forecast of three

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Speaker 2: point eight to four point one billion dollars in sales.

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Speaker 3: So let's get into it all a little bit more ed.

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Speaker 1: Yeah, I think the shares are so interesting.

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Speaker 4: For maybe it's a company reporting November fifth, and it

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Speaker 4: took time for the market to wake up and read

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Speaker 4: the numbers a little bit.

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Speaker 1: Who knows. The chip maker did give what was seen as.

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Speaker 4: A sluggish sales outlook and at first disappointed investors. What

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Speaker 4: has changed. Rene Huss is the CEO of ARM and

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Speaker 4: joins US. Now it's really interesting right in the function

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Speaker 4: of what ARM does on licensing royalties, because sometimes it's

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Speaker 4: not about unit growth. I look at like revenue for example. Well,

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Speaker 4: maybe some evidence renee that the Chinese consumer in particular

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Speaker 4: is buying higher end handsets.

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Speaker 1: How does that help you benefit?

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Speaker 5: Well, good morning Ed and Caroline, and we are very

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Speaker 5: happy about the quarter we just reported. Exceeded the high

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Speaker 5: end of the guidance and our royalties were at a

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Speaker 5: record number. And to your question, you know, one of

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Speaker 5: the things that we have seen a huge benefit from

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Speaker 5: with our technology going forward has been our Version nine,

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Speaker 5: which commands a much higher royalty rate than we have

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Speaker 5: in the past. And what that allows us to do

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Speaker 5: is not exactly track the market from a unit standpoint.

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Speaker 5: One of the proof points of that unit sales for smartphones.

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Speaker 5: We're up four percent in the last quarter. Our royalties

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Speaker 5: were up forty percent, so you can get a sense

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Speaker 5: that you're seeing a very big difference. So that's really

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Speaker 5: driven by two factors. One is Version nine, as I said,

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Speaker 5: which commands a high royalty rate. And second, we're just

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Speaker 5: seeing more armed technology inside these smartphones, particularly the premium segment,

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Speaker 5: which also commands a high royalty rene.

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Speaker 4: A lot of investors, people that I speak to in

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Speaker 4: the world of technology think you're great. You're a great CEO,

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Speaker 4: and you've been embarked on this sort of journey for

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Speaker 4: profit and margin. But is there a ceiling to that, Like,

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Speaker 4: at some point, how do you keep driving those levels?

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Speaker 4: Are you sort of very pricing dependent at this point?

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Speaker 5: I don't think so. You know, the market that we're

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Speaker 5: addressing is very, very large, and one of the things

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Speaker 5: that has made it even larger has been all things AI.

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Speaker 5: And if you think about what ARM does we do compute,

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Speaker 5: we do the CPU. Every digital device has one, and

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Speaker 5: the fact that you're running all these AI workloads on

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Speaker 5: devices that are already running different applications that they had

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Speaker 5: to in the past, that drives a need for more

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Speaker 5: and more compute capacity, which ends up ending up with ARM.

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Speaker 5: So as a result, we were very very fortunate to

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Speaker 5: have some tailwinds from a technology standpoint driving our growth.

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Speaker 5: So as far as the ceiling, I don't think about

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Speaker 5: it quite that way, But I do think where we

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Speaker 5: are is a market where we just can't get enough

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Speaker 5: compute capacity for all these workloads that are going to

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Speaker 5: be run on every device in your home or your business.

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Speaker 2: Meanwhile, though perhaps some of the tension around compute and

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Speaker 2: AI has been whether China is going to quote unquote

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Speaker 2: beat out the United States and that suddenly comes into

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Speaker 2: a closer focus, particularly with the results of the US election.

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Speaker 2: Does any of that concern you, particularly around the trade

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Speaker 2: and embroilment and whether that curtails the industry and going forward.

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Speaker 5: Yeah, a little hard to say, Caroline, relative to what

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Speaker 5: could happen from perspective of tariffs, etc. Etc. I think

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Speaker 5: the one thing that I'm happy about post the election

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Speaker 5: on Tuesday is that here we are on Thursday morning

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Speaker 5: and we have a result. We're not debating about what

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Speaker 5: might happen or could happen or should happen. We at

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Speaker 5: least have a result behind us, which is good for business,

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Speaker 5: it's good for the country. Now going forward, we'll just

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Speaker 5: have to see what goes forward. In terms of the

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Speaker 5: things you mentioned, the China business for US has been

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Speaker 5: very resilient and very strong, both in data center and

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Speaker 5: phones that we've talked about, but also in the oomobile sector.

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Speaker 5: So regarding your question, we'll just have to wait and see.

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Speaker 3: Talk to us a.

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Speaker 2: Little bit about the phone part, and in particular whether

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Speaker 2: or not just US replacing less often but with much

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Speaker 2: more expensive phones is going to be able to what

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Speaker 2: makes your numbers resilient going forward? Will that continue to

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Speaker 2: upset the fact that we're just buying fewer on them.

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Speaker 5: I do, and the reason for that is when you

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Speaker 5: start thinking about all of these AI agents that will

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Speaker 5: increasingly be running on your smartphone, that is going to

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Speaker 5: drive demand for more and more capability on these premium phones.

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Speaker 5: And that's great for ARM because if you think about

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Speaker 5: a next generation smartphone still has to run games, it

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Speaker 5: still has to run apps, it still has to connect

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Speaker 5: to the internet. But now you want to run a

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Speaker 5: large language model or small language model, and you need

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Speaker 5: to interface with a cloud and do security. That all

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Speaker 5: requires a lot of compute, much more than in the past,

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Speaker 5: which is great for ARM because you can't do it

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Speaker 5: without using our technology.

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Speaker 4: Renee Bloomberg reported that ARM was interested in buying some

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Speaker 4: or all of Intel.

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Speaker 1: What's the latest for that, please? Yeah, I read that.

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Speaker 5: I'm not sure exactly where it came from, but I

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Speaker 5: can't really comment on those kind of rumors.

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Speaker 4: Small recent is a licensed dispute with Qualcomm, a longtime

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Speaker 4: partner and customer of yours. Wouldn't it just make sense

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Speaker 4: for you guys to work it out and settle and

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Speaker 4: get something done so you can both just move forward.

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Speaker 5: Yeah? So it's an ongoing litigation, as you know ed,

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Speaker 5: and in just the baseline things, it's a.

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Speaker 1: Pretty straightforward case.

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Speaker 5: Consent is required anytime one company buys another company that

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Speaker 5: has armed technology. Consent was not granted in this case,

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Speaker 5: and just by way of history, every contract we have

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Speaker 5: has this clause. And in thirty five years, I think

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Speaker 5: we've done one hundred and thirty assignments and one hundred

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Speaker 5: and thirty times consent has been granted. This time it wasn't.

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Speaker 5: We sent a notification to Qualcom that they were in

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Speaker 5: breach of the license. We're very confident in our case.

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Speaker 5: But more importantly, this is about fairness. It's about equity

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Speaker 5: the ecosystem. We have lots of partners who license our

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Speaker 5: technology over the last decades. We need to be fair

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Speaker 5: and equitable, and we just now have a situation, an

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Speaker 5: unprecedented one where consent was not granted, and as a result,

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Speaker 5: we took the action we thought we needed to take.

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Speaker 2: How is it doing business therefore with what is a

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Speaker 2: key customer but increasingly becoming more of a frenemy.

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Speaker 5: Well, you know, in terms of the litigations, I said,

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Speaker 5: there's not much more I can add on to it

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Speaker 5: From a financial standpoint, we've made assumptions all along when

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Speaker 5: we've given guidance and forecast to investors that we will

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Speaker 5: not prevail in this case. So we've taken a fairly

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Speaker 5: bearish position on the financial outlook. And that's really about

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Speaker 5: about all I can say on it.

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Speaker 4: Rene At the end market level and product level, what

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Speaker 4: is the next phase farm, what's the next story you

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Speaker 4: think will carry the company forward?

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Speaker 5: Yeah, thanks for asking that question. You know, compute subsystems

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Speaker 5: and these are all about taking the pieces of IP,

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Speaker 5: stitching them together together, providing them as a full end solution,

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Speaker 5: which greatly saves engineering time, time to market, time to

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Speaker 5: profit for our partners. That is the direction of the company.

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Speaker 5: We've seen amazing traction. We've had lots of design wins

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Speaker 5: in the data center space. Media Tech just announced their

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Speaker 5: first chip set recently using ARMED compute subsystems for mobile.

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Speaker 5: I see that to be pervasive going forward, and it's

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Speaker 5: going to allow us to not only get great benefits

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Speaker 5: to the customers' markets, but those drive much higher royalties

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Speaker 5: than anything we've ever done in the past, which will

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Speaker 5: drive growth for us.

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Speaker 2: Just paint the picture of where ARM will be in

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Speaker 2: the ecosystem. Five ten years from now, you're still majority

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Speaker 2: held by soft Bank in terms of your outstanding shares.

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Speaker 2: MASA has some big vision one hundred billion dollars to

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Speaker 2: put in in terms of creating an AI behemoth that

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Speaker 2: complements what you do. But then there's also the element

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Speaker 2: of whether you just stick to the designing part of

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Speaker 2: the business.

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Speaker 3: Where do you take this business? Renee as a CEO, we.

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Speaker 5: Have a lot of optionality, Caroline in terms of the

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Speaker 5: things that we do, and these are obviously the things

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Speaker 5: we talk about all the time internally. Which direction do

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Speaker 5: we go, how horizontal do we go, how vertical do

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Speaker 5: we go. I'm not able, unfortunately to talk about unannounced

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Speaker 5: products this morning with you, although I would love to,

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Speaker 5: but I just can't. But we do focus very much.

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Speaker 5: We do focus very much on the vertical and horizontal

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Speaker 5: nature of the products and also AI and the form

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Speaker 5: factors and everything that goes forward. So five to ten

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Speaker 5: years ago, from five dicent years from now, I do

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Speaker 5: know that ARM will be involved in computing in a

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Speaker 5: very large way.

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Speaker 3: I'm CEO, Rene has We appreciate the time today. Thank you,