Sometimes it's not about unit growth. I look at like revenue, for example, maybe some evidence, Renee, that the Chinese consumer in particular is buying higher-end handsets. How does that help you benefit? Well, good morning at and Caroline, and we are very happy about the quarter we just reported, actually the high end of the guidance, and our royalties were at a record number. And to your question, you know, one of the things that we have seen a huge benefit from with our technology going forward has been our version nine, which commands a much higher royalty rate than we have in the past. And what that allows us to do is not exactly track the market from a unit standpoint. One of the proof points of that unit sales for smartphones were up 4% in the last quarter. Our royalties were up 40%. So you can get a sense that you're seeing a very big difference. That's really driven by two factors. One is version nine, as I said, which

commands a higher royalty rate. And second, we're just seeing more ARM technology inside these smartphones, particularly the premium segment, which also commands a higher royalty. But a lot of investors and people that I speak to in the world of technology think you're great, you're a great CEO, and you've been embarked on this sort of journey for profit and margin. But is there a ceiling to that? Like at some point, how do you keep driving those? That is, are you sort of very pricing dependent at this point? I don't think so. You know, the market that we're addressing is very, very large. And one of the things that has made it even larger has been all things. I mean, if you think about what ARM does, we do compute. We do the CPU. Every digital device has one. And the fact that you're running all these A.I. workloads on devices that are already running different applications that they

had to in the past, that drives the need for more and more compute capacity, which ends up ending up with ARM. So as a result, we're very, very fortunate to have some tailwinds from a technology standpoint driving our growth. So as far as a ceiling, I don't think about it quite that way, but I do think where we are is a market where we just can't get enough compute capacity for all these workloads that are going to be running on every device in your home or your business. Meanwhile, though, perhaps some of the tension around compute and AI has been whether China is going to, quote unquote, beat out the United States, and that suddenly comes into a closer focus, particularly with the results of the US election. Does any of that concern you, particularly around the trade and employment and whether that curtails the industry going forward? Yeah, a little hard to say, Caroline,

relative to what could happen from the perspective of tariffs, etc. I think the one thing that I'm happy about post the election on Tuesday is that here we are on Thursday morning and we have a result. We're not debating about what might happen or could happen or should happen. We at least have a result behind us, which is good for business. It's good for the country. Now, going forward, we'll just have to see what goes forward. In terms of the things you mentioned, the China business for us has been very resilient and very strong both in data centers and phones, as we've talked about, but also in the automobile sector. So regarding your question, we'll just have to wait and see. Talk to us a little bit about the phone part and in particular, whether or not just us replacing less often but with much more expensive phones is going to be able to. What makes your numbers resilient going forward?

Will that continue to offset the fact that we're just buying fewer of them? I do. And the reason for that is when you start thinking about all of these agents that will increasingly be running on your smartphone, that is going to drive demand for more and more capability on these premium phones. And that's great for ARM, because if you think about a next-generation smartphone, it still has to run games, it still has to run apps, it still has to connect to the Internet. But now you want to run a large language model or small language model, and you need to interface with the cloud and do security. That all requires a lot of compute, much more than in the past, which is great for ARM because you can't do it without using our technology. Rene Bloomberg reported that ARM was interested in buying some or all of Intel. What's the latest with that, please? Yeah, I read that. I'm not sure exactly where it came from,

but I can't really comment on those kind of rumors. More recent is a license dispute with Qualcomm, a long-time partner and customer of yours. Wouldn't it just make sense for you guys to work it out and settle and get something done so you can both just move forward? Yeah. So it's an ongoing litigation, as you know. And in just the baseline things, it's a pretty straightforward case. Consent is required anytime one company buys another company that has ARM technology. Consent was not granted in this case. And just by way of history, every contract we have has this clause. And in 35 years, I think we've done 130 assignments, and 130 times, consent has been granted. This time it wasn't. We sent a notification to Qualcomm that they were in breach of the license. We're very confident in our case. But more importantly, you know, this is about fairness. It's about equity, the ecosystem.

We have lots of partners who license our technology over the last decades. We need to be fair and equitable. And we just now have a situation, an unprecedented one, where consent was not granted. And as a result, we took the action we felt we needed to take. How is it doing business, therefore, with what is a key customer but increasingly becoming more of a frenemy? Well, you know, in terms of the litigation, as I said, there's not much more I can add onto it from a financial standpoint. We've made assumptions all along when we've given guidance and forecast to investors that we will not prevail in this case. So we've taken a fairly bearish position on the financial outlook, and that's really about it. But all I can say on it. Renee, at the end market level and product level, what is the next phase? What's the next story that you think

will carry the company forward? Yeah. Thanks for asking that question. You know, compute subsystems, and these are all about taking the pieces of IP. Stitching them together, providing them as a full end solution, which greatly saves engineering time, time to market, time to profit for our partners. That is the direction of the company. We've seen amazing traction. We've had lots of design wins in the data center space. Media Tech just announced their first chipset recently using ARM compute subsystems for mobile. I see that to be pervasive going forward, and it's going to allow us to not only get great benefits to the customers' markets, but those drive much higher royalties. And anything we've had done in the past, which will drive growth for us. Just paint the picture of where we'll be in the ecosystem five, ten years from now, is still majority held by SoftBank in terms of your outstanding shares. Masa has some big vision, $100 billion to put in in terms of creating an AI.

behemoth that complements what you do. But then there's also the element of whether you just stick to the designing part of the business. Why did you take this business, Rene, as you. We have a lot of optionality, Caroline, in terms of the things that we do. And these are obviously the things we talk about all the time internally, which direction do we go, how horizontal do we go, how vertical do we go? I'm not able, unfortunately, to talk about unannounced products this morning with you, although I would love to, but I just can't. But we do focus very much. We do very much on the vertical and horizontal nature of the products and also the form factors and everything that goes forward. So 5 to 10 years ago, from 5 to 10 years from now, I do know that arm will be involved in computing in a very large

Arm CEO Says Market Can't Get Enough Compute Capacity

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Arm CEO Says Market Can't Get Enough Compute Capacity

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