Core Viewpoint - ARM's data center business is expected to grow significantly in the next 2 to 3 years, potentially matching or exceeding the smartphone business, which currently accounts for 40% to 45% of total revenue [1][8]. Group 1: Financial Performance and Guidance - Data center revenue growth is currently outpacing other business segments, with its share expected to rise from over 15% towards 20% [1][8]. - The company has raised its fiscal year 2026 revenue guidance from an initial "at least 20%" to a midpoint of 22%, exceeding previous expectations [1][12]. - For fiscal year 2027, while no formal guidance is provided, maintaining a 20% growth rate is deemed reasonable [1][12]. Group 2: Research and Development - R&D spending is increasing at a rate higher than revenue growth, with expectations of a slowdown in R&D expenditure growth after Q1 of the following year [1][14]. - The company anticipates that the growth rate of R&D spending will stabilize, moving towards a more moderate pace [1][14]. Group 3: Market Dynamics and AI Integration - ARM views the recent volatility in the software sector as typical during major technological shifts, emphasizing that AI will not replace chips but rather coexist with them [2][15]. - The deep integration of AI within enterprises is still in its early stages, with ARM itself not fully transformed yet [2][15]. - The demand for computing power remains substantial, and ARM is focused on long-term opportunities in this evolving landscape [2][15]. Group 4: CPU Role in Data Centers - The shift in data centers is moving from training to inference workloads, with CPUs becoming increasingly important due to their efficiency and low latency [3][10]. - The trend of increasing CPU core counts is expected to continue as AI workloads evolve, benefiting ARM's positioning in the market [3][10]. Group 5: Royalty Revenue and Market Impact - Despite anticipated declines in smartphone shipments, ARM expects minimal impact on royalty revenue due to a focus on high-end markets and the transition to newer architectures [4][5]. - The company estimates that even with a 20% drop in smartphone sales, the impact on royalty revenue would only be around 2% to 4% [5][9]. - ARM's royalty income is projected to remain robust, supported by growth in cloud AI and infrastructure business, which offsets potential risks from the mobile sector [4][5]. Group 6: Future Outlook and Strategic Initiatives - The CSS (Compute Subsystems) business is showing significant growth, with expectations that its contribution to royalty revenue will rise from around 15% to over 50% in the next 2 to 3 years [10][11]. - ARM is actively involved in developing new products and services, with future updates on fiscal year 2028 expected as plans are finalized [12][12].
ARM2026财年Q3电话会