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Speaker 1: ARM shares more than fifty percent higher. The bullish outlook

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Speaker 1: is something we can now discuss with the CEO, Renee

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Speaker 1: has joining us, and Renee you must feel vindication. You

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Speaker 1: are trying to tell this story at the IPO and

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Speaker 1: boom you deliver.

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Speaker 2: Well, thank you, Carolyn. Yes, we're really happy with the

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Speaker 2: results that we posted. Additionally, very very good feelings about

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Speaker 2: the forecast going forward. But as you said, this is

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Speaker 2: really the results of strategies that were put in place

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Speaker 2: and number of years ago that are now just really

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Speaker 2: starting to come to fruition.

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Speaker 1: Yeah, when we think about the vindication, when we think

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Speaker 1: though still about basically more of your technology going into

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Speaker 1: more types of equipment. You managed to see a diversification

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Speaker 1: out of phones. Paint us the strategy of ARM going forwards,

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Speaker 1: because many would say, actually, you're not just well the

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Speaker 1: overall designer of chips, you're basically making the chips. You're

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Speaker 1: fabulous in some way. Is how do you see that

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Speaker 1: relationship going forward with Qualcom, for example, Well, a lot

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Speaker 1: of folks.

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Speaker 2: You know, as you said, didn't really understand the company

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Speaker 2: well and where we fit. And obviously we had a

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Speaker 2: lot of growth attached with smartphone market. But ARM is

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Speaker 2: in a lot of devices that people may not naturally

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Speaker 2: think about. We're in a Tesla vehicle, We're in a

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Speaker 2: Ford f one fifty, We're in a Ring smart camera,

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Speaker 2: We're in the Samsung TV, a Samsung smart appliance. So

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Speaker 2: just about every device you can think of has ARM inside,

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Speaker 2: and just about every device you can think of needs

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Speaker 2: more and more compute, particularly as AI is now driving

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Speaker 2: a whole new demand cycle.

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Speaker 1: Talk to us about AI. Jeffrey is really singling that

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Speaker 1: out the analyst. They're saying that this really shows your

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Speaker 1: beneficiary from AI. But where does the AI focus come You,

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Speaker 1: of course were in video before. They are all about

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Speaker 1: AI accelerators, and I'm interested as to whether or not

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Speaker 1: that would be an area that you get into other

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Speaker 1: than servers.

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Speaker 2: Well, right now, in video is a great partner their

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Speaker 2: Gracehopper chip, a super chip uses a lot of ARM

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Speaker 2: CPUs in combination with their GPU, which is a really

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Speaker 2: really great solution for high end AI training in the

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Speaker 2: data center as well as inference. But when you start

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Speaker 2: moving to smaller devices, say smartphones or PCs, well AI

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Speaker 2: is going to run there too. If you look at

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Speaker 2: some of the recent announcements by Samsung and Google relative

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Speaker 2: to their smartphones. There's a lot of things such as

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Speaker 2: circling and image on a browser and then having that

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Speaker 2: browser go off and do search based on the circle.

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Speaker 2: That's AI that's actually running in a smartphone. And what

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Speaker 2: we're seeing is really a drive for more and more

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Speaker 2: compute capacity to run these AI algorithms, some that people

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Speaker 2: don't even know what they are yet. But what designers

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Speaker 2: want to do and need to do is future proof

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Speaker 2: their designs was more and more compute and that is

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Speaker 2: really driving a strong licensing cycle force in terms of

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Speaker 2: more demand RENEE.

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Speaker 3: We've been at Pains to kind of help the audience

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Speaker 3: explain how your business works. You know, the royalty side,

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Speaker 3: I call it the building blocks of chip design, and

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Speaker 3: then the licensing side managing the interaction between the the

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Speaker 3: line design of the chip and the software it's intended

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Speaker 3: to interact with. And what you said to the street

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Speaker 3: is smartphone isn't everything anymore. It's a third of our business,

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Speaker 3: but somehow you're also boosting the royalties that are coming

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Speaker 3: in on that business. Just explain how that dynamic is working.

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Speaker 3: Smaller proportion of overall, but you're basically making more money

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Speaker 3: per deal.

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Speaker 2: We've got two things kind of going on in the

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Speaker 2: smartphone market. One is we've moved to a higher version

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Speaker 2: of our process or what we call version nine, and

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Speaker 2: the royalties associated with version nine are roughly double than

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Speaker 2: that of version eight, and that's growing. Last quarter, about

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Speaker 2: ten percent of our royalties came from version eight. Now

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Speaker 2: it's version nine is about fifteen percent and growing.

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Speaker 4: So that's happening.

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Speaker 2: But secondarily, people are putting more V nine in their smartphones.

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Speaker 4: And they put V eight.

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Speaker 2: What does that mean, Well, it means more processors to

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Speaker 2: handle these complex tasks such as AI. So what you

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Speaker 2: have is a compounding effect. Increase rates from the new version,

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Speaker 2: but more and more compute because more and more computes

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Speaker 2: needed to run these complex devices. So it's having a

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Speaker 2: real growth effect for us.

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Speaker 3: Renee, what happened in China was a surprise. How long

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Speaker 3: does that continue for.

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Speaker 2: You know, China follows the rest of the world for us,

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Speaker 2: said in the sense that where we're very strong in

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Speaker 2: the rest of the world visa v data centers or evs.

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Speaker 4: China follows that.

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Speaker 2: And the reason is that the software ecosystem, which is

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Speaker 2: global that is really predominantly ARM based. China partners want

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Speaker 2: to leverage that. And one thing that China is very

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Speaker 2: unique about is speed. They want to go as fast

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Speaker 2: as possible, develop products as quickly as possible. Well, the

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Speaker 2: software base allows them to develop products very quickly as

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Speaker 2: the market of the dot So you know, there's been

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Speaker 2: a lot written about China headwinds in the market, etc.

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Speaker 4: Etc. But for us, China has been a great market.

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Speaker 3: Overnight, Rene soft Bank, which hold ninety percent of your company,

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Speaker 3: said that they're going to put you at the center

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Speaker 3: of their AI strategy. How much say are you going

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Speaker 3: to have in that? If SoftBank is kind of dictating

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Speaker 3: how they see your role in the playout of AI infrastructure, well, I.

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Speaker 4: Can speak from kind of two hats.

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Speaker 2: One is as the CEO of ARM and the other

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Speaker 2: as a soft failing board member.

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Speaker 4: I'll speak to the former primarily. Here.

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Speaker 2: We believe that AI is the most profound opportunity in

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Speaker 2: our lifetimes and we are only at the beginning. When

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Speaker 2: you think about artificial general intelligence and what is required

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Speaker 2: to make that happen in terms of compute, power, efficiency, energy,

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Speaker 2: those are all great areas for us to be involved

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Speaker 2: and focusing in so I think AI is not in.

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Speaker 4: Any way, shape or form a heighth cycle.

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Speaker 2: I think we're in incredibly early days and I think

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Speaker 2: it's going to have amazing impact on our planet.

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Speaker 1: I mean extraordinary. We're still just looking at your share

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Speaker 1: price now rocketing up to about sixty on the day,

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Speaker 1: up more than seventy percent over the last five days.

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Speaker 1: Are there any areas of concern for you? You were

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Speaker 1: just talking about the macro picture, for example, being in

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Speaker 1: China that actually has played to your strengths, even though

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Speaker 1: the rest of the economy we slightly worry about. China

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Speaker 1: still a bright spot. What about geopolitics? What about the

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Speaker 1: international role that you have as ARM.

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Speaker 4: Yeah, it's a great question, you know.

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Speaker 2: I think for CEOs, particularly now in the semi natural world,

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Speaker 2: the geopolitics, government relations, things of the nature. Five ten

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Speaker 2: years ago, that wasn't something that we had to worry

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Speaker 2: about a lot. Now it's obviously front and center in

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Speaker 2: terms of how we think about the world. I think

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Speaker 2: for ARM, I don't know that our issues are concerns

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Speaker 2: there are any different than my peer group faces we

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Speaker 2: all share globally. We think the world is a better

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Speaker 2: place when it's an easier global ecosystem, but we're also

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Speaker 2: mindful that we are in very different times than we

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Speaker 2: were five ten years ago.

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Speaker 3: Renee a question from our audience on social media for you,

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Speaker 3: will we start doing business directly with the software ecosystem

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Speaker 3: in the context of AI edge computing. That's what they

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Speaker 3: want to know.

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Speaker 2: We do a lot of business with the software ecosystem

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Speaker 2: in the sense of that they're incredibly strong partners to us.

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Speaker 2: When you think about Android as a software ecosystem, when

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Speaker 2: you think about Windows, when you think about everything going

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Speaker 2: on with open source software, that is something we are

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Speaker 2: incredibly involved in, particularly from a technology side, because at

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Speaker 2: the end of the day, what makes arms so pervasive,

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Speaker 2: it's a software ecosystem like no other. So software is

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Speaker 2: front and center of what we think about in terms

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Speaker 2: of all of our engineering engagements.

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Speaker 3: I'm CEO Rene has stock Storing. Great to have some

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Speaker 3: time with you. Thank you so much.