Tel.

+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange

www.iirgroup.com Regulated and

LSE: IIR authorised by

ARM Holdings PLC 04 July 2008

Update Report – 1Q 08 Results

Strong growth momentum expected in FY 2009

Common HOLD Direct access to the full report free of charge at

Fundamental research indicates a 9% upside in the common stock over the next 6-12 months. We
have calculated the target price based on fundamental factors, using a weighted average of target
Stock http://www.iirgroup.com/researchoracle/viewreport/show/20197
prices obtained using DCF and comparative valuation methodologies. We have taken a 6-12 month
investment horizon for this stock, as the semiconductor industry in which the company operates is
Ticker: ARM.L highly cyclical and therefore trends can be captured more accurately with a shorter investment
horizon.
Target price: GBp92.39
Current price: GBp85.00 We reiterate the common stock from a HOLD with a 6-12 month target price of GBp92.39.

ADR BUY The ADR is expected to appreciate approximately 20% over the next 6-12 months as the 9%
fundamental upside is augmented by approximately 11 percentage point upside attributable purely to
the anticipated appreciation of Sterling against the US dollar.

Ticker: ARMH
Target price: US$6.10 We upgrade the ADR (1 ADR = 3 common shares) from a HOLD to a BUY with a 6-12 month target
Current price: US$5.07 price of US$6.10.

Supervisor: Shilpen Shah
Analyst: Abhilasha Jha
Editor: Heloise Capon
Global Research Director:
Satish Betadpur, CFA
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com

Next news due:

2Q 08 results, 30 July 2008
Report summary
ARM Holdings PLC’s (ARM) 1Q 08 results exceeded our expectations, with total revenues growing 5.5%
q-o-q in 1Q 08. Considering overall uncertainty and seasonality in Royalty revenues, Management
expects total revenues in US dollar terms to remain flat or lower sequentially in 2Q 08. We expect ARM
to experience moderate total revenue growth in FY 2008 despite current industry slowdown as a result
of uncertain global macroeconomic conditions and reduced consumer spending. The Semiconductor
Industry Association (SIA) has forecast cell phone unit shipments to grow approximately 12% y-o-y in
2008, while microprocessor shipments are expected to grow at approximately 10% over the same
period. As a leader in the smartphone market, ARM is expected to benefit from growth in these
segments in the form of increased licensing activity and robust royalty revenues, as its customers ship
more products incorporating ARM technology. We anticipate FY 2009 to be a stronger year for the
semiconductor industry, and expect industry growth to benefit ARM through increasing licensing
activity and robust royalty revenues. Our margin estimates for FY 2008 and FY 2009 remain
unchanged for the company. Although we are optimistic about the long term growth prospects of the
company in view of its strong leadership position in the market, and higher revenue contribution from
the Physical IP Division (PIPD) segment, we retain a cautious outlook in the near term.
Currency impact for US investors
The impact by itself of the anticipated currency movements on the ADR (now US$5.07) over 6-12
months, without considering changes in the share price, is broadly positive and is expected to be:

Over 6 months: US$4.85

Over 12 months: US$5.61

Page 1 Refer to page 5 for footnotes