Operator: Your next question comes from the line of Hans Mosesmann from Rosenblatt.
Hans Mosesmann: Can you give us a sense on ASP trends over the past quarter, licensing, royalties, how’s that trend or how’s it looking as the year progresses?
Karel Janac: So the ASPs have been growing nicely. We’re pretty much on track — with the ASP trends that we discussed on the IPO couple of years ago, whereas we get more products into the market, with higher ASPs and as the chips get more complex and use more system IP, the ASP is growing very nicely. And I think our financials show that. So that trend continues. And what we said is that we’re going to be at $1 million average by 2026 ASP and I think that can very easily happen.
Hans Mosesmann: And right now they’re around half of that?
Karel Janac: Yes, so right now I would say it’s a little bit, I think last year we were somewhere around $460,000. Now we’re probably over $500,000, probably 550,000, something like this. But the reason that we know we’re on track, is that a number of the deals are over $1 million. And so, it’s definitely not, it’s actually probable that eventually the average deal will be over $1 million. So the ASPs are growing well.
Nicholas Hawkins: This is Nick. Nice to catch up again. One other piece of color in addition to Charlie’s commentary there is when you look at royalties, we’ve had this conversation before, royalties, the ASP in royalties, is also in the ascendancy. As we have transitioned away from several years ago into being dominated by the mobility market, the cell phone, smartphone market with very small royalty rates. Now to more — dominated by automotive, which has probably 3x the royalty rate of smartphones and similar devices. So and some are much higher than that as Charlie likes to point out, the space type application has substantially higher ASP. So that’s another drag factor to the upside.
Hans Mosesmann: Okay. That’s helpful. And just a question back in the IPO, you guys, and since then, I guess, you’ve been saying that in automotive platforms, you could see as many SoCs per car north of 20, or maybe between 20 and 25 from what it was a few years ago, maybe 3 or 4. Is that still seen to happen over the next several years?
Nicholas Hawkins: Yes, absolutely. And I think we’re pretty much on track to where that was originally conceived in terms of the timeline.
Karel Janac: And it can be more. I mean, we had a discussion with a customer, and they were telling us that they need 46 cameras for level 4 driving, right? So that would imply SoC consumption way in advance of basically having 4 camera SoCs, right? So, yes, we feel pretty comfortable with that projection.
Hans Mosesmann: Okay. Then the last question, and I’ll go back in the queue. The time from licensing to tape out, or from time to license to production for your customer engagements, has that changed over the past couple of years?
Karel Janac: So, it has. I mean, in a particular vertical, it has not, right? So, the automotive design still takes 2.5, 3 years. What has changed is that as people do more generative AI designs, and those designs, the large language models and the algorithmic of technologies that are being employed, have impact on the underlying silicon. And so that segment is moving very, very fast, much faster than any other segment that we’ve seen. People are looking for 9 months design cycles or less, and product life cycles probably of 1 or 2 years only. And so, that segment is moving very, very fast, and that would, on the average, lower the design term. But within each individual segment, we’re not seeing much change because we enable people to go faster, but the chips are more complex, right? So there’s a constant fight between automation and productivity and complexity within each segment.
Operator: [Operator Instructions] Your next question comes from the line of Kevin Garrigan from WestPark Capital.
Kevin Garrigan: Let me echo my, congrats on the progress. Going off of Hans’ question regarding kind of SoCs and cars, I know you gave an example of a customer looking for multiple vision cameras. You’re seeing a lot more automotive OEMs kind of introduce, I would say, infotainment features right now, while ADAS may be taking a little bit longer than kind of expected. So is there kind of one category that you’re seeing more designs for currently than others, like maybe infotainment or the design starts kind of focusing on all functions across the board?
Karel Janac: So we’re seeing, I mean, the automotive progress continues, right? So we’re seeing some more Tier 1s starting to build chips. We’re starting to see some more OEMs build chips, right? In terms of categories, there’s a lot of noise and publicity about automated driving, but we don’t see the design activity really changing a whole lot, right? Because those electronic decisions are made 7 to 8 years before deployment. So on the design side, we’re not seeing any slowdown in the automotive driving direction. It’s just that people are realizing, and we’ve been saying, I’ve been feeling this all along, is that the automated driving in a city environment is going to be exceedingly difficult without changing the cities, and therefore will take a lot longer. But on highways and secondary — highways, primary highways and secondary highways, automated driving is highly useful and very practical and very valuable. And that will continue.
Kevin Garrigan: Okay. Perfect. I appreciate that color. And just as a follow-up, so you noted that there are several more evaluations and prospective customers in the pipeline for FlexNoC 5. Do you expect many of these customers to kind of decide sooner rather than later whether to use Arteris, or is it more kind of maybe an end-of-year phenomenon?
Nicholas Hawkins: No, I mean, FlexNoC 5 has been doing very well, right? So the penetration is meeting expectations. The second-generation physical awareness provides very valuable capability to customers below 60 nanometer. And so FlexNoC 5 has a 30% pricing uptick, and so that’s a combination of value and ASP increase that really helps the business. And what we’re looking forward to is sometime this year, to announce some further innovation that will further provide additional value.
Operator: Your next question comes from the line of Gus Richard from Northland.
