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Semiconductor IP Annualized Contract Value

normalizes committed semiconductor IP license fees across active contracts, helping separate underlying licensing momentum from quarter-to-quarter revenue timing.

By Lee BaileyPublished Sep 28, 2026
Research context

See what supports this page, how current it is, and where comparable or historical context is available.

Research date
Sep 28, 2026Use the dated article and cited sources for the definition, examples, and stated limitations.
Operating-model context
10 connected conceptsPart of the reviewed Semiconductor IP Licensing Economics; issuer definitions remain distinct where disclosed.
Company examples
1 reviewed companyRelationships reflect supported examples, not a normalized cross-company KPI ranking.
  1. ACV smooths contract timing, but it isn't revenue
  2. Royalties sit outside the metric
  3. Part of the Semiconductor IP Licensing Economics
  4. See It in Company Research
  5. Continue Research

Semiconductor IP annualized contract value, or ACV, is a contract metric that spreads committed license fees over a standardized annual period rather than waiting for GAAP revenue recognition.

Arm reported $1.732B of ACV at June 30, 2026, up 13% year over year. The company defines ACV as annualized committed fees from active signed licensing agreements and explicitly excludes potential future royalty revenue.

ACV smooths contract timing, but it isn't revenue

That distinction matters because license and other revenue can swing with the timing and size of large agreements and when licensed IP is delivered. ACV instead asks how much committed licensing economics sit in the active contract base after annualization.

Arm also uses different annualization periods depending on contract type. Total Access and architecture-license agreements are annualized over their actual contract term, while some single-use, limited-use, Flexible Access, and technology license agreements are treated as active over three years based on historical licensing patterns.

Royalties sit outside the metric

Future per-chip royalties are excluded from ACV even though they can become the longer-lived part of semiconductor IP economics. A rising ACV therefore says more about the committed licensing base than about the full lifetime value of design activity.

For Arm, Q1 FYE27 ACV rose while the company was also expanding into production silicon. That makes the metric useful for tracking the licensing engine specifically, but not a complete measure of the broader company.

Primary sources: Arm Q1 FYE27 shareholder letter and Arm FYE26 Form 20-F.

Part of the Semiconductor IP Licensing Economics

Connect committed license economics and revenue recognition with customer design wins, the lag to production, and shipment-driven royalty value capture and estimation.

Browse the full operating model in Company Analysis →
Where this concept fits
  • Contract base and licensing revenueCurrent relationship
    Portfolio and single-design license structures create committed fees, but ACV, remaining performance obligations, and recognized license revenue answer different questions about the same contract base. Future usage royalties sit outside both ACV and Arm's disclosed RPO.
    Annualized Contract ValueCurrent conceptLicense and Other RevenuePortfolio License ModelRemaining Performance Obligations
  • Design selection and time to production
    A design win marks customer selection of IP, which may occur under an existing portfolio license. The chip still has to move through tape-out, manufacturing and product ramp before the upstream licensing relationship becomes a downstream royalty stream.
    Design WinLicense-to-Royalty Lag
  • Shipment-driven royalty realization
    Royalty revenue combines shipped units with contract-specific per-chip economics and technology mix. Because customer shipment reports can lag the accounting close, issuers may accrue estimates and true them up later rather than waiting to recognize the economic shipment period.
    Per-Chip RoyaltyRoyalty AccrualRoyalty Rate MixRoyalty Revenue

See It in Company Research

These companies are examples of how the concept is reported or discussed in public filings. Definitions can differ by issuer; these links open company research rather than a normalized metric comparison.

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Compare committed license economics without confusing annualized active-contract value with GAAP revenue or future royalties.

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