The EDA and the Electronics IP Almanac: Q4 2010

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We finally come to the Electronics IP portion of The EDA and Electronics IP Almanac: Q4 2010.

Recall from the Introduction, that these are the G5 IP Vendors we planned to cover here:




The Electronics IP G5 Results for Nominal Q4 2010

We begin our review of the Q4 2010 Electronics IP G5 performances by looking at the Electronics lP summary revenue list (Table 3) below.

Our eyes are drawn at once to the “bottom line” for the latest quarter’s Sum is revealed: nearly $310 million in revenues for the IP G5 in Q4 2010! An impressive 36.6% leap over the $227 million of Q3 2010 (and Q2 2010)!

And the distinction among the five IP vendors has never been more clear: two dominant vendors and three runners up. ARM Holdings’ strength and size is on display once more, joined this quarter by the royalties’ king: Rambus. While the business models of each are dramatically different, together the “odd couple” took 87.6% of the IP revenue sum in Q4 2010, leaving the last 12.4% to divide among the bottom three companies.

Yet in all five entities there is excitement and achievement to celebrate in Q4 2010, as the vendor by vendor details in the sequel will each reveal.  



You want Profits? Check out Table 4 just below! The “odd couple” of ARM and Rambus dominates again, usurping a mind-boggling 94.6% of the $84.589 million in total earnings created this quarter by the G5.

Strangely enough, Q4 2010 was not the quarter with the largest total IP G5 profit of last year. That distinction goes to Q1 2010, when Rambus’ incredible $150.9 million in net income lifted the IP G5 to nearly $181 million in total Q1 earnings. Indeed, in Q1 2010 the odd couple created more than 100% of the IP G5’s total profit.



Electronics IP Vendor by Vendor Details -- Q4 2010

On February 01, 2011, ARM Holdings plc reported unaudited financial results for Q4 2010 and for the entire 2010 year. Revenues for Q4 2010 were $180.11 million, some 29.14% better than its Q4 2009 revenue of $139.47 million, and 13.91% more than $158.12 achieved in sequential Q3 2010. [3]

Net Income for Q4 2010
was $46.96 million, 65.4% improved over $28.392 recognized in Q4 2009, and more than double the $23.38 million achieved in just prior Q3 2010. [3]

For the entire year 2010, ARM delivered $628.50 million in revenue and $132.90 million in net income, up 31.42% and 110.02% compared to $478.23 million and $63.28 million in 2009, respectively.

During Q4 2010, several partners entered into long-term commitments to use ARM technology where the revenue associated with these agreements goes into backlog. The revenue for these agreements will be recognized in future quarters as engineering and delivery milestones are achieved. In addition, two new subscription licenses were signed and a third was renewed during the quarter. As a result, group backlog at the end of the quarter was up about 35% sequentially, and about 75% year-on-year, to a record high.

Progress on key growth drivers in Q4 2010

Growth in adoption of ARM processor technology:

o 35 processor licenses signed for a range of applications including smart-phones, mobile computers, servers and smartcards

o Microsoft announced that future generations of Windows operating system will support ARM-based chips

o NVIDIA licensed both Cortex-A15 and the next-generation ARM architecture for computing markets

o Strong licensing drives a 35% sequential increase in order backlog

Growth in mobile applications:

o 1.1 billion ARM-processor based chips shipped into mobile devices

Growth beyond mobile in consumer electronics & embedded products:

o 0.7 billion ARM-processor based chips shipped into everything from smart-meters to solid-state drives

Growth in outsourcing of new technology:

o Physical IP: Freescale became ARM's first subscription licensee for physical IP at an advanced technology node; and a foundry licensed a royalty-bearing platform of physical IP.

o Graphics: 8 licenses for Mali, ARM's advanced graphics processor


Warren East, Chief Executive Officer, said, "ARM continues to sign licenses with influential market leaders in an increasingly digital world, and as the industry chooses ARM technology in a broadening range of electronic products, it further drives our long-term royalty opportunity. The growth in licensing and royalty revenues, throughout 2010, has combined to deliver our highest ever annual revenues, profits and cash generation.”




“2011 will bring exciting opportunities and challenges as ARM enters competitive new markets and we are well positioned to succeed with leading technology, an innovative business model and a thriving ecosystem of partners," East concluded.


It is generally expected that, after a strong recovery in 2010, the semiconductor industry will see more typical growth levels in 2011.  With ARM well positioned to continue to gain share, we expect group dollar revenues for the full-year to be at least in line with market expectations.


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