It’s coming from certainly the data center, certainly from the edge devices, and we think over time, even AIPCs. So it’s a huge growth vector.
Thomas O’Malley: Super helpful. And then if I could just ask a follow-up as well. If you look at kind of the seasonality of the close year, you obviously saw really strong results in both the December and the March quarter. Obviously, you’re not perfect with units. But if you look at June and the smartphone ecosystem, you’re kind of seeing a little bit of a pause in the Android ecosystem and kind of some cautious data points from the supply chain in general. Could you talk about what you expect in terms of seasonality to start your fiscal year? Any titbits there would be helpful. I know you’re not guiding June, but any way to help think about how we begin the next fiscal year would be helpful. Thank you.
A – Rene Haas: Yeah. I’m not going to comment in terms of too far forward on the seasonality component to what we’re doing. But what I would emphasize is that we’re a bit of a different company to think about relative to how you think about other companies in terms of their specific exposure to a market. We are involved in just about every single end market. And every single end market is moving from v8 to v9, which have, as I said, doubled the royalty rates. And just about every single one of these markets is putting more compute into their devices. So sometimes when we’ve had questions from folks saying, well, wait a minute. I’m trying to figure out how units match up to numbers, we’re operating on a little bit of a different plane because of our broad, broad adoption. And as I mentioned at the start of the call, the pervasiveness of the architecture, it’s just driving a whole different set of growth vectors.
Thomas O’Malley: Thank you very much, guys.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Vivek Arya of Bank of America Securities. Your line is open, Vivek.
Vivek Arya: Thanks for taking my question. I just wanted to clarify, Rene, is this on the v9, is the 10% to 15% related to number of customers, number of chips or revenue related to those sales? Because I think in the shareholder letter, it’s qualified as v9 of 15% of royalty revenue rather than — I guess a bigger question is, just so that we have an apples-to-apples sense of how many of your smartphone units are actually using v9 right now versus the ones that use v9 in the last quarter? Is that a better way to track v9 adoption? [Multiple Speakers]
Rene Haas: Yeah. So let me try to answer your question and maybe Jason, Ian, if I’m missing some facts, you guys can fill in. First off, the number when we say 10% and 15%, that’s a percentage of our overall royalty revenue, so that’s the way to think about that. When you think about the number of units that are moving from v8 to v9, I don’t think we have anything specific that I can give you on this call. But what I can tell you is just as an example or an anecdote is that v9 is being used extensively in almost exclusively now in all the premium smartphones. And the premium smartphones, such as the Galaxy S24, those are actually part of the segments that are seeing a little bit better growth than their compatriots. So given the fact that virtually all the premium smartphones have now moved to v9 and as I mentioned before, people are trying to put as much v9 technology in that smartphone to capture the AI wave, I think that’s maybe 1 way to think about proportionately where some of the growth comes versus units.
What we tend to see with the smartphone market, for example, is typically a waterfall over time where what was in the premium unit finds its way into the high end then into the midrange. But that’s the way — maybe a good way to think about it in terms of where the percentages are. There certainly is a lot of v9 in the premium smartphone and we’re seeing a lot of premium smartphones being sold.
Vivek Arya: Thank you.
Operator: Thank you. Our next question comes from the line of Mehdi Hosseini of SIG. your question, please. Mehdi?
Mehdi Hosseini: Yes. Thanks for taking my question. Just actually as a follow-up, is there any way you could elaborate on the mix of v9 by end market like a smartphone versus cloud compute? And I have a follow-up.
Rene Haas: I’ll attempt to answer that and again, maybe Ian and Jason. As I said, premium smartphone is almost exclusively now v9. And virtually every high end data center chip is v9. When you look at Grace Hopper, when you look at Graviton, when you look at Microsoft Cobalt, they’re all v9-based designs.
Jason Child: And the only thing I would add on — in terms of royalty revenue and then chips that have actually been deployed in the market, we are overweighted towards smartphones on v9 primarily because it’s an annual refresh cycle. And so I would think of that being a bit ahead. Over time, I think the other lines of businesses will catch up, but it’s predominantly or definitely weighted more towards smartphone for the reasons that Rene just pointed out on premium mix.
Mehdi Hosseini: Got it. Thank you. And my follow-up has to do with the market share. I think end of FY ’24 — I’m sorry, end of FY ’23, cloud was about 10% market share for you and networking was 26%. Is there any way you can give us some color as how as you close FY ’24, how those market shares are changing?
Rene Haas: Yeah, not today. We’re not prepared to give that. When we give the updates for next year or the next quarter, we can do that. But I can say, we’re very pleased about the direction of travel, and AI has only helped that grow faster.
Mehdi Hosseini: Got it. Thank you.
Operator: Thank you. Our next question comes from the line of Vijay Rakesh of Mizuho. Your question please, Vijay.
Vijay Rakesh: Yeah. Hi. Congrats again on a great quarter. Just a quick question. On the cloud compute side, if you could give us some way of how to look at what do you think will be the growth in 2024, given you have some pretty market customers with GH20 and Graviton and Cobalt 100 now? And I have a follow-up.
Rene Haas: Sorry, I didn’t catch it quite. You’re asking about projected growth for next year in cloud?
Vijay Rakesh: Yeah. Just for calendar ’24, how do you see the growth with those on the cloud compute side with — you had some big market customers there now. How do you see that growth?
Jason Child: Yeah. As Rene just mentioned on the — for the last question, we’ll provide our market share update on — specifically on Compute, which is for us, almost all cloud in infrastructure. And we’ll provide some views on where we expect that to go next year. So give us 90 days.
Vijay Rakesh: Got it. And then on the mobile side, obviously, you mentioned good traction with v9. Just wondering what penetration rate on v9 is now when you look at the premium phones, I guess, all of it? But how — what the projection on that is for the year, I guess? How do you save it for later?
Rene Haas: Is your question what percentage of smartphones are v9?
Vijay Rakesh: Yeah.
Rene Haas: Yeah. As I mentioned earlier, the numbers are somewhat skewed relative to the premium segment versus the broader segment. If you look at overall units, most of the premium, if not all, smartphones have moved to v9, and the rest of the segments have been slower to adopt. But the premium segment draws a very, very large mixture of lots of cores and a lot of royalty-rich cores. So it tends to weigh out the numbers relative to overall units. We expect v9 and Ian, keep me kind of comfortable on this, usually next three, four years to kind of find its way throughout the entire smartphone category.
Ian Thornton: Yeah. If you go back to how v8 took over from v7, it took about three years to get from [Technical Difficulty] here to about 80%, 90% penetrated.
Vijay Rakesh: Got it. Thanks.
Operator: Thank you. Our next question comes from the line of Ross Seymore of Deutsche Bank. Your question, please, Ross.
Ross Seymore: Hi, guys. Thanks for letting me ask the question. Congrats on the strong results and guide. I wanted to go back to the Arm China conversation. So a clarification and the main question. The clarification was that 25% that I think, Jason, you mentioned, was that of total revenues or just of royalties? And then the main question is, could you just help us break down a little bit how that’s so strong, whether it’s total revenues or just of royalties, that was a significant driver of growth. And depending upon the answer to the clarification, it could have been more than all of the sequential growth. So I just wanted to get my arms around what was really driving the growth and how much of it came from in Arm China.
