In Q1 2007, in addition to the renewal of the subscription license, ARM signed 11 traditional licenses, three of which were signed for ARM7(TM) family processors (including two licences signed with top 20 semiconductor companies), and six which were signed for ARM9(TM) family processors, demonstrating the very long design-in life of ARM's technology. We saw continued demand for our Cortex(TM) family of products with the signing of our ninth Cortex-R4 processor license which brings the total number of Cortex licenses signed to 24. The sales pipeline includes a number of further Cortex licensing opportunities which we expect to close in coming quarters.
Q1 2007 PD Licensing Analysis - 474 cumulative processor licenses Multi-use Term Per-use U D N U D N U D N Total ARM7 2 1 3 ARM9 1 1 2 1 1 6 ARM11 1 1 Cortex-R4 1 1 Total 11 U:Upgrade D:Derivative N: New PD royalties
PD unit shipments continued to grow in Q4 2006 (our partners report royalties one quarter in arrears) despite an overall sluggish industry backdrop. Reported processor unit shipments were 724 million, up 3% sequentially and up 27% compared to Q1 2006. ARM7 family shipments, comprising 63% of total shipments, were up 11% sequentially. ARM11(TM) family shipments grew 76% sequentially and now make up just over 1% of total shipments. The ARM9 family accounted for 36% of total shipments for the quarter. Overall, the average royalty ARM received per processor increased marginally to 6.2 cents (Q4 2006: 6.1 cents) with the impact of the increasing penetration of higher value chips outweighing, in this particular quarter, continued strong unit growth in lower-priced chips.
The proportion of total shipments accounted for by the mobile segment remained at 66%, with unit growth of 3% sequentially and 33% over Q1 2006. Beyond mobile, the embedded segment continued to grow strongly, up 24% sequentially and 65% over Q1 2006, driven primarily by a growing proportion of general-purpose microcontrollers being based on ARM technology, partly accounting for the significant growth in ARM7 family shipments.
ARM signed 13 physical IP licenses in Q1 2007, including the first license for silicon on insulator ('SOI') physical IP arising from the acquisition of SOISIC in October 2006.
For the more traditional physical IP licenses, much like in PD, the licenses signed were for more mature physical IP technology. We are encouraged by the continued demand for these products as further platform licenses were signed at both the 130nm and the 180nm nodes.
Q1 PIPD Licensing Analysis - 300 cumulative physical IP licenses Process Node (nm) Total Platform Licenses Classic(TM) 180 1 Metro(TM) 130 1 Advantage(TM) 65 2 Standard Cell Libraries Classic Metro 90 1 Advantage 90 1 Memory Compilers Classic 250/130 2 Metro Advantage 90 2 Velocity PHYs 90/65 2 SOI Licenses 180 1 Total 13
PIPD royalties in Q1 2007 were $8.4 million, down from $9.6 million in Q4 2006 and the same level as in Q1 2006. As highlighted in our earnings release last quarter, the world's semiconductor foundries saw significant declines in the utilisation rate (an indication of the volume of wafers generated by a semiconductor foundry) in Q4 2006. As the majority of PIPD royalties are generated by semiconductor foundries and our royalties are a function of the volume of wafers produced, the sequential decline in PIPD royalties generated from wafers shipped in Q4 2006 (our partners report royalties one quarter in arrears) was consistent with our expectations. Reported utilisation rates at the semiconductor foundries showed sequential declines again in Q1 2007, although industry commentary indicates foundry utilisation rates are starting to pick up in Q2 2007.
Appointment of independent non-executive director
As announced in Q1 2007, Young K. Sohn joined the board as an independent non-executive director on 2 April 2007. He has extensive experience in the semiconductor industry both in Silicon Valley and in Asia. He is a director of Cymer, Inc. and M-Stream Technology Limited and an advisor to Panorama Capital, a Silicon Valley-based venture capital firm. Previously, he was President of the semiconductor products group at Agilent Technologies, Inc. and President, CEO and Chairman of Oak Technology, Inc. Prior to that he was President of the hard-drive business of Quantum Corporation and, before that, Director of Marketing at Intel Corporation.
Following a year of significant investment in new employees in 2006, 2007 is expected to be a year of consolidation and enhanced productivity. At 31 March 2007, ARM had 1,667 full-time employees, a net increase of eight since the end of 2006. At the end of Q1, the group had 677 employees based in the UK, 566 in the US, 163 in Continental Europe, 199 in India and 62 in the Asia Pacific region.