Summary of Arm Conference Call - March 24, 2026 Company Overview - **Company**: Arm (NasdaqGS:ARM) - **Keynote Speaker**: Ami Badani, Chief Marketing Officer - **Focus**: Discussion on product strategies across three business units: Edge AI, Physical AI, and Cloud AI Key Points by Business Unit Edge AI Business Unit - **Speaker**: Chris Bergey, Executive Vice President, Edge AI - **Growth Projection**: Anticipated 40% increase in Total Addressable Market (TAM) over the next five years due to AI workloads being integrated into various devices [6] - **Market Drivers**: - Mobile devices remain a significant driver for growth, with expectations for increased silicon content due to agentic services [9] - Intelligent edge devices are seeing AI integration, enhancing user experience [11] - **Performance Optimization**: Introduction of CSS (Compute Subsystem) to optimize performance from transistor to software stack, leading to improved market competitiveness for partners [13][14] - **Mobile Royalties**: 25% of mobile royalties are now derived from CSS, indicating a successful transition to this model [15] - **Emerging Segments**: Growth opportunities identified in XR platforms and personal AI computing, with significant demand for advanced computing capabilities [16][18] Physical AI Business Unit - **Speaker**: Drew Henry, Executive Vice President, Physical AI - **Market Size**: Current TAM for Physical AI is approximately $25 billion, projected to grow to $50 billion, with potential for a hockey stick growth to $200 billion by 2031 [35][57] - **Key Applications**: - Focus on automotive platforms transitioning to autonomous systems, with increasing compute content driving market growth [36] - Robotics and humanoid platforms are expected to be significant contributors to future growth [38] - **Technological Advancements**: Emphasis on reducing latency in AI applications, particularly in autonomous vehicles and robotics [34] - **Vertical Integration**: Shift from providing individual IP components to curated designs that enable faster market entry for partners [41][43] Cloud AI Business Unit - **Speaker**: Mohamed Awad, Executive Vice President, Cloud AI - **Market Opportunity**: Data center CPU market projected to exceed $100 billion by fiscal year 2031 [64] - **Engagement Strategy**: - Collaboration with hyperscalers (e.g., AWS, Google) and enterprise customers to provide integrated solutions [66][67] - Introduction of AGI CPU to enhance performance across various segments [69] - **CSS Impact**: CSS has significantly reduced barriers to entry for customers, saving substantial engineering time and accelerating time to market [72] Additional Insights - **AI Software Development**: Introduction of KleidiAI, a library that simplifies AI workload integration on Arm CPUs, enhancing developer experience [24] - **V9 Architecture**: V9 is positioned as the most secure and advanced AI CPU architecture, with a penetration rate expected to rise from 50% to 85% in two years [23] - **GPU Leadership**: Arm is the highest volume GPU shipper globally, with over 12 billion chips shipped, indicating strong market presence [21] Conclusion - Arm is strategically positioned for significant growth across its business units, driven by advancements in AI, cloud computing, and vertical integration strategies. The company is focusing on optimizing performance and reducing barriers for partners, which is expected to yield substantial market opportunities in the coming years.

Core Insights - The application of artificial intelligence (AI) is penetrating various industries and is set to reshape the cloud ecosystem, entering a new era of Agent AI systems that can operate autonomously and respond in real-time [1][3] - The demand for computing power and memory bandwidth is experiencing exponential growth as AI model parameters scale from millions to trillions, posing significant challenges in power consumption and heat dissipation, especially for mobile devices [3][4] - Arm has launched the new Arm Lumex CSS platform, designed to accelerate AI experiences in flagship smartphones and next-generation personal computers, achieving up to five times AI performance improvement [3][5] Industry Transformation - AI is driving a deep transformation in global industry structures, with traditional data centers evolving into "AI data centers" to optimize model training and large-scale inference [4] - The automotive sector is transitioning from "software-defined" to "AI-defined," enhancing perception, automation, and personalized experiences [4] - Smart devices like smartphones and PCs are becoming "AI companions" or "AI workstations," integrating into users' thinking, work, and creative processes [4] Product Development - Arm is continuously upgrading its product ecosystem to meet evolving AI computing demands, focusing on a "platform-first" strategy that integrates high-performance CPU/GPU hardware, software tools, and libraries [4][5] - The new Arm Lumex CSS platform incorporates the second-generation Scalable Matrix Extension (SME2) technology, significantly enhancing device responsiveness and operational efficiency [5][6] - By 2030, SME and SME2 technologies are expected to add over 10 billion TOPS of computing power to more than 3 billion devices, leading to an exponential increase in edge AI performance [6] Market Opportunities in China - China possesses a vast market size and diverse application scenarios for AI, maintaining pace with global technological innovations and demonstrating strong commercialization capabilities [7] - The AI smartphone market in China is projected to reach 118 million units by 2025, with a year-on-year growth of 59.8%, capturing 40.7% of the overall market [7][8] - Arm is deepening collaborations with leading manufacturers like vivo to accelerate the deployment of edge AI applications and enhance user experiences [7][8] Future Outlook - Despite a slowdown in smartphone industry growth, with a projected 1.0% year-on-year increase in global smartphone shipments by Q2 2025, there is confidence in the ongoing partnerships with Chinese manufacturers [8] - The increasing consumer spending on advanced smartphone features reflects a growing recognition of the value of computing devices in daily life, driven by AI [8] - Arm aims to continue close cooperation with Chinese ecosystem partners to support and expand AI technology deployment across various sectors, including smart terminals, PCs, infrastructure, automotive, and IoT [8]