Good day, and welcome to the CEVA, Inc. fourth quarter and full year 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Richard Kingston, Vice President, Market Intelligence, Investor & Public Relations. Please go ahead, sir.
Thank you, Rocco. Good morning, everyone, and welcome to CEVA's fourth quarter and full year 2021 earnings conference call. I'm joined today by Gideon Wertheizer, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and highlights from the fourth quarter and provide general qualitative data. Yaniv will then cover the financial results for the fourth quarter and full year 2021 and also provide guidance for the first quarter and full year 2022. I will start with the forward-looking statements. Please note that today's discussion contains forward-looking statements that involve risks and uncertainties as well as assumptions that if they materialize or prove incorrect could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions.
Forward-looking statements include statements regarding demand for and benefits of our technologies, expectations regarding market dynamics, changes in the semiconductor industry, and our plans to capitalize on the foregoing, beliefs regarding benefits and the impacts of the Intrinsix acquisition, including expansion into the aerospace and defense market and ability to offer integrated IP solutions and enrich security and assurance products, expectations and financial guidance regarding future performance, including growth in licensees, revenues and customer agreements and qualitative data for 2022, and objectives regarding sustainability. For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission. These include the scope and the duration of the pandemic, the extent and length of the restrictions associated with the pandemic, and the impact on customers, consumer demand, and the global economy generally.
The ability of CEVA's IPs for smarter connected devices to continue to be strong growth drivers for us. Our success in penetrating new markets and maintaining our position in existing markets. The ability of new products incorporating our technologies to achieve market acceptance. The speed and extent of the expansion of the 5G and IoT markets. Our ability to execute more base station and IoT license agreements. The effect of intense industry competition and consolidation. Global chip market trends, including supply chain issues as a result of COVID-19 and other factors. Our ability to successfully integrate Intrinsix into our business. CEVA assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. With that said, I would now like to hand the call over to Gideon.
Thank you, Richard. Good morning, everyone, and thank you for joining us today. The fourth quarter and the fiscal year 2021 was extremely intense and exceptionally successful. As the digital transformation drives industry to become connected and intelligent, our ubiquitous technology and collaborative business model present a significant and secular growth prospect. Our record financial results for 2021 and the 2022 guidance that Yaniv will shortly outline bodes well with these dynamics. For the fourth quarter, we deliver record revenue of $34.1 million, the third consecutive quarter of record high revenue, up 22% compared to the fourth quarter of 2020. The licensing environment continues to be robust at $21.3 million on the back of 20 new license agreements and four first-time customers.
The fourth quarter licensing engagement highlights the transformation in our value proposition from licensing of standardized IP cores to our licensing of comprehensive IP platforms which leads to higher upfront license revenue and larger royalty opportunities. In this context, we executed a number of sizable agreements this quarter, among which are agreement with a Japanese OEM for the nationwide deployment of 5G fixed wireless access in Japan, a lead OEM customer for next generation Wi-Fi 7, a tier-one semiconductor company for an AI-based advanced driver assistance systems ADAS project. We also executed the first integrated IP solutions agreement where we couple IP licensing with Intrinsix chip design for comprehensive platform for smart motor control product for a large U.S. semiconductor vendor. Royalty revenue for the quarter came in ahead of our expectation at $12.7 million.
Our diverse base station and IoT product category continued to expand, up 21% in royalty revenue versus the respective quarter last year. Our technologies being deployed in wearables, PCs, smart TV, robot vacuum cleaner, surveillance camera, and in plenty of other IoT devices are key drivers for that growth. On 5G RAN, a key customer of ours released for field-testing new 5G RAN product enabled by our latest and most advanced DSP, the XC16. Compared to the fourth quarter of 2020, royalty revenue was down 21% as large U.S.-based handset OEM moved to 5G, for which it uses chips from a competitor, which we alluded to on prior calls. For the full year 2021, our total non-GAAP revenue grew 22% to a record of $122.9 million, driven by step-up in our licensing NRE and related revenue.
Revenue for this part of our business had a record performance of $73 million, up 39% compared to last year with 773 agreements up from 55 last year. This achievement in licensing is key for our business growth, as signing up licensees is the precursor for royalty revenue, which in turn scales our operating leverage and earnings per share. Our consistent and relentless effort to grow and diversify our licensees is already apparent in the royalty revenue out of the base station and IoT segment that grew by 29% year-over-year to a record of $28.6 million and 69% in units and approaching 1.3 billion units.
Overall, royalty revenue was record high, $49.9 million, of which strong growth in royalty revenue out of the base station and IoT category more than offset the decline in the handset category. To grow further our licensee base and strengthen our value proposition in this engagement, we completed the strategic acquisition of Intrinsix during the year. Intrinsix brings in new customer base in the lucrative aerospace and defense market and enable us to offer integrated IP solutions where we offer combination of IP licensing with the SoC design for an optimal performance outcome and larger revenue share with our customers. Let me at this stage walk you through the thought process we went through to determine our focus go-to-the-market strategy. The ongoing turmoil in chip supply has made evident the foundational role the semiconductor industry has in technology innovation and the overall economy.
According to Deloitte, in 2020, global semiconductor sales rose 6.6% to $440 billion, even as global GDP shrank 3.5%. For the next decade, the semi space is expected to show 50% faster growth than global GDP. Furthermore, geopolitical tension and criticality of chip supply to national security drive government to spend and incentivize investment in the semi space, as can be seen by the anticipated U.S. Senate bill for $52 billion investment in semiconductor technologies, the Chinese government announcement of $150 billion investment in semi space over the next ten years. This explosive demand for chips drives OEM and IT company to internalize their chip needs and to engage directly with foundries and IP companies.
Also, the Chinese government's ambitions to be self-sufficient in the semiconductor space encourage local investors and technologies to form new chip companies to drive the fast-growing electrical, industrial, and consumer product industries. Against this backdrop, CEVA's broad IP portfolio and capabilities to expedite and streamline customer chip development opens new and sizable customer opportunities. Let me add more color on how we plan to capitalize on these tectonic changes. Wireless technologies, including cellular, Wi-Fi, Bluetooth, and UWB, have been key strengths for CEVA. Over the years, we have been able to focus on the right end market and to build a very large customer base, key customers. We have earned strong reputation, which enables us to engage with and sign up top customers to drive next generation and new trends in wireless. Strategically, we will pivot in two main wireless trends.
First, the proliferation of 5G in broadband and massive IoT. The recent Ericsson Mobility Report projects 5.5 billion cellular connections by 2027 that are not handset, up from 1.9 billion connections in 2021. Cellular IoT applies to broad market, among which are fixed wireless access devices, automotive, industrial laptops, and more. Cellular IoT is fundamental to enable smart transportation, smart grid, robotics, and remote health care. CEVA offers to OEMs and semiconductor companies targeting cellular IoT, two highly integrated IP platforms, the PentaG for mobile broadband IoT and Dragonfly for massive IoT. We believe that by capitalizing on these two technologies in the upcoming new generations, places us in a position to address the whole market need and to enable new entrants to penetrate this huge space. Second is Wi-Fi upgrade cycle. The Wi-Fi market is huge and growing.
ABI Research forecasts 5.5 billion Wi-Fi devices by 2026, up from 3.5 billion in 2021. The rollout of the latest standard Wi-Fi 6, and recently 6E, is underway and expected to see more shipments than any prior standard as it extends beyond smartphone, PC, and tablet to smart home, industrial, cars, AR, VR, and many more markets. The complexity encompassed in new Wi-Fi's design, along with new connected devices that require Wi-Fi IP integration, is driving strong momentum in our overall licensing and NRE business, which was up 39% in 2021 versus 2020. Our R&D investment will focus on the next generation Wi-Fi 7, which is expected to be in the market by 2024.
As mentioned earlier, in the fourth quarter, we signed a lead customer Wi-Fi 7 agreement with one of the largest OEM in China, which seeks to decouple its dependencies on chip incumbents that currently dominate the advanced Wi-Fi chipset market. Edge AI emerges from growing need to handle AI processing from cloud to smart devices such as smartphones, car, robot, or 5G base station to gain faster response and higher security. A recent ABI Research forecast, Edge AI is a fast-growing market, expecting to surpass 1.3 billion units by 2026. CEVA has targeted the Edge AI market from early on. We already have good penetration with Edge AI in automotive ADAS market, where we are closely working with industry leader, including both semis and OEM, and in the surveillance and consumer market.
To further capitalize on our strengths, we unveiled last month our new generation AI processor, the NeuPro-M. NeuPro-M delivers a significant performance leap compared to its predecessors, NeuPro-S. For the first time, we introduce new concept in AI architecture design, security integration, and chiplet scalability. Its heterogeneous multiprocessor architecture offers performance ranging from 20 TOPS to 1,200 TOPS. Its use extends beyond video to a whole new range of AI usages such as natural language processing, 5G network optimization, level four, five fully autonomous car, industrial machines, and more. For the first time, NeuPro-M enables chiplet scalability, for which our Intrinsix team can offer end-to-end design for heterogeneous SoC. Wearable and hearables. The onset of COVID-19 has increased the demand for wearable and wireless headset and catalyzed innovation in these spaces.
Wireless headsets are looking for high-quality sound with smart and dynamic noise suppression. Smartwatches are disrupting the traditional watch market and are evolving into health and activity monitoring devices. Research firm Yole Développement forecast the shipments of TWS earbuds, hearing aids, smartwatches, and smart speakers will surpass 1.3 billion units by 2026. CEVA already has a strong position in the wearable and hearable space with dozens of active customers. We are in a unique position to standardize wireless audio processing IP with our latest Bluebud platform. Last month, we enriched the Bluebud value proposition with the launch of Bluebud-HD, a suite of pre-configured software for high quality audio, voice conversation, and contextual awareness. Bluebud-HD lowered the cost of entry for many semiconductor and OEMs that lack the skills, expertise in wireless audio, which CEVA masters. China.
Our revenue out of China grew 30% this year versus last year. Unit shipment by our Chinese customer grew 38% versus 2020. We are the de facto standard in wireless communication used by all major players, among which are ZTE, UNISOC, Bestechnic, Beken, ASR Microelectronics, and others, which overall constitute more than 75 active customers. ZTE, our key customer in 5G base station RAN, is set to substantially grow network footprint in China, as can be seen by its recently securing 31% of the recent China Mobile procurement bid for 5G 700 MHz network and 34% of the 5G standalone construction for China Telecom and China Unicom. We are uncovering sizable opportunities in automotive, robotics, and mobile, where leading OEMs are internalizing chip design. Our most advanced technologies and our brand recognition set us up for further growth in China.
Next, before my closing remarks, I want to update you on our objectives and commitment to our future sustainability. Companies around the world have provided sustainability plans for decreasing their carbon footprint over the next decade. At our end, being an IP company, our direct carbon footprint is minimal, with activities primarily by R&D engineers and no manufacturing facilities. However, we intend to take advantage of our expertise in wireless AI and low power design to help our customers achieve their own sustainability goals. As I stated above, we are focusing on wireless IoT, where our technology can add resiliency and runtime analytics to optimize energy and water utilization, and to expedite the shift to renewable energy. We will also work with our base station RAN customer on next-generation DSP technologies that will serve their objective of lower heat dissipation and energy consumption.
We will continue to periodically consult with our investors on their perspective on sustainability. In summary, CEVA is uniquely positioned to capitalize on the semiconductor momentum and market transformation toward digitization, AI, and connectivity. Our customer pipeline at the end of the year is historically high. We believe our key customers are keenly receptive to our product roadmap and priorities, and willing to expand the scope of engagement with us. We expect 2022 to be an exciting year, with growing momentum in revenue, EPS, and customer engagement. We are determined to continue to develop standout products and consistently grow our customer base and licensing engagement to scale our business. Finally, I would like to take this opportunity to thank all our employees for their hard work and dedication, innovation, and fantastic execution.
I would like to extend my thanks to our partner suppliers and our shareholders for their confidence and support. We wish you all a healthy, happy, and prosperous year, and please stay safe. With that said, I'll now turn the call over to Yaniv, who will outline our financials and guidance.
Thanks to Gideon. I'll start by further reviewing our results of operations for the fourth quarter of 2021. Revenue for the fourth quarter was a record high at $34.1 million, up 21% compared to $28.1 million for the same quarter last year, our third sequential all-time high. Non-GAAP revenue was $34.2 million, up 22% year-over-year. $0.2 million higher due to the purchase price allocation adjustment associated with our Intrinsix acquisition. The revenue breakdown is as follows. Licensing and NRE-related revenue was $21.3 million, reflecting 63% of our total revenue. Up 78% as compared to the fourth quarter of 2020, and just slightly below our third quarter record high.
Royalty revenue was $12.7 million, reflecting 37% of our total revenue, down 21% from $16.1 million for the same quarter last year, but up 13% sequentially. Base station and IoT royalty revenue contributed $7.8 million in the quarter, up 21% year-over-year, including all-time record high contribution from our sensor fusion product line and continued growth and strength across our base station and IoT product lines overall. Gross margins were 83% on GAAP basis and 87% on non-GAAP basis, both higher than projected due to lower allocation of Intrinsix NRE costs from R&D into cost of goods expense line. Non-GAAP quarterly gross margin exclude approximately $0.3 million of equity-based compensation expenses and $1 million in amortization of acquired assets associated with the Intrinsix acquisition and Immervision investment.
Our total operating expenses for the fourth quarter was $26.6 million over the high end of our guidance due to lower allocation of Intrinsix NRE costs from R&D to the cost of revenue compared to our prior quarter guidance. Such shifts between the two expense line items may happen from time to time and are tied to the actual chip design work performed in a quarter. OpEx also included aggregate equity-based compensation expenses of approximately $3.2 million, amortization of acquired intangibles of $1 million, and $0.3 million of Intrinsix related deal costs. Our total operating expenses for the fourth quarter, excluding equity-based compensation, amortizations of intangibles, and deal costs, were $22.4 million over the high end of our guidance due to the same reasons I just stated for GAAP.
GAAP other income included a $1.5 million revaluation net of taxes of our investment in Cipia, formerly called Eyesight Technologies, the leading provider of in-cabin sensing solution in the automotive industry that recently went public on the Tel Aviv Stock Exchange. We'll adjust our investment quarterly based on the market valuation of their shares. GAAP net income for the fourth quarter was $3.9 million and diluted net income per share $0.17 compared to a net income of $0.6 million and $0.03 for the fourth quarter of 2020. Our non-GAAP operating income increased 8% to $7.2 million from $6.7 million for the same quarter last year.
Our non-GAAP net income and diluted EPS for the fourth quarter was $5.3 million and $0.22, respectively, significantly higher than our internal estimates. Net income and diluted EPS for the fourth quarter of 2020 was $4.7 million and $0.20, respectively. Other related data. Shipped units by CEVA's licensees during the fourth quarter were 416 million units, down 5% sequentially and down 14% from the fourth quarter of 2020 reported shipments. Of the 416 million shipped, 83 million units or 20% were for handset baseband chips, reflecting a sequential increase of 148% from 33 million units in handset baseband shipped during the third quarter of 2021, and a 62% decrease from 149 million units shipped a year ago.
Our base station and IoT product shipments were 333 million in the quarter, down 18% sequentially and up 25% year-over-year. Of note, sensor fusion were the record 21.8 million units in the quarter, with cellular IoT, Bluetooth, and Wi-Fi also delivering strong contributions. As for the year, our total shipments increased 24% year-over-year to over 1.6 billion units, an all-time record high which equates to approximately 52 CEVA-powered devices sold every second in 2021. Annual shipments of handsets were down 33% year-over-year to 383 million devices. This decline is attributable to a socket loss of a customer at a key OEM who was replaced by Qualcomm 5G modem chipsets and lower shipments of overall 2G feature phones in the emerging markets last year.
Our base station and IoT product royalty revenue continued to grow and reached a new record level of $28.6 million, up from $22.3 million in 2020 and $13 million in 2019. In terms of units, base station and IoT product units shipped were 69% year-over-year to almost 1.3 billion devices. Non-GAAP operating income from 2021 increased 43% to $22.7 million from $15.9 million reported for 2020. Overall, excluding our Intrinsix business, we grew our revenue 14% year-over-year, with the non-GAAP licensing business growing 22% to almost 64 million units. With the Intrinsix business, we now fully on board, and with the new opportunities outlined by Gideon earlier, we are excited by the potential ahead of us. As for the balance sheet items.
As of December 31, 2021, CEVA's cash equivalent balances, marketable securities, and bank deposits were $155 million. We did not repurchase any shares during the year and have approximately half a million shares available for repurchase. Our DSOs for the fourth quarter were 39 days, slightly lower than the prior quarter and below our normal level. During the quarter, we generated $11 million cash from operations, depreciation and amortization of $2.3 million, and the purchase of fixed assets, $0.7 million. On an annual basis, we generated $25.8 million from operations compared to $15.2 million a year ago. At the end of the year, our headcount was 476 people, of which 390 were engineers, slightly lower than the 485 people at the end of September.
Now for the guidance. As Gideon explained, we expect 2022 to be another exciting year with strong growth expected in licensing and NRE revenues and in royalties from our base station and IoT category. Overall, we're forecasting total revenue to be in the range of $141.5 million-$145.5 million, versus $122.9 million in 2021. Our licensing NRE and related revenue business is expected to grow and expand as we benefit from multiple growth vendor vectors where we excel. In particular, 5G, Wi-Fi 6 and 7, Edge AI, wearable, and hearable. In addition to our new integrated IP solution offerings and expanded access to the lucrative aerospace and defense market via Intrinsix present further compelling opportunities.
In royalties, our base station IoT product category continues to flourish, and we will have a noticeable contribution in royalties in 2022. Anticipated royalties from base station, RAN, Bluetooth, Wi-Fi, and sensor fusion will be the main drivers and will outgrow their representative markets. Overall, we forecast another growth year in royalty revenue, where the strength of our base station IoT royalty drivers will more than offset the anticipated decline in handset base station royalties as the remaining 4G smartphones from the tier-one OEM are phased out over the course of the year. On the expense side, we forecast just over $18 million in additional overall expenses in 2022 versus 2021, recorded both in COGS and OpEx, as we consolidate Intrinsix business on a full year basis compared to only seven months in 2021, and from our other R&D ongoing investments.
Specifically, on COGS, we expect higher non-GAAP expenses of over $10 million due to the cost of NRE revenues from Intrinsix. OpEx, with a strong licensing execution in recent years and even stronger expectations for 2022, we will continue to support these new customers and reinforce our leadership with disciplined investment in R&D. Overall, OpEx increases will be approximately $8 million. Part of it is also contributed to the consolidation of the Intrinsix business on a full year basis compared to only seven months in 2021. Equity-based compensation is forecasted to be higher in 2022 than 2021, around $16 million. This is due to special retention efforts targeting our employees compared to pre-COVID-19 era and the recent competitive semiconductor industry in all worldwide R&D sites.
Annual gross margin is forecasted to be in the region of 80% on a GAAP basis and 82%-84% on non-GAAP basis. Interest income is forecasted to be higher than in 2021 due to the increased interest rate environment and hopefully better FX effects than we experienced in 2021, at approximately $0.4 million per quarter.
Taxes are expected to be approximately 25% of pre-tax income on non-GAAP basis, and our share count for 2022 is expected to be approximately 24 million shares. Specifically for the first quarter of 2022, gross margin is expected to be approximately 80% on a GAAP basis and 82% on non-GAAP basis, excluding an aggregated $0.3 million of equity-based compensation expenses and half a million dollars of amortization of other assets. OpEx for the first quarter of 2022 is forecast to be lower than the fourth quarter on a GAAP basis and flattish on a non-GAAP basis. GAAP-based OpEx is expected to be in the range of $26.4 million-$27.4 million.
Of our anticipated total operating expenses for the first quarter, $3.2 million is expected to be attributed to equity-based compensation expense and $0.8 million for amortizations. Excluding those items, non-GAAP OpEx for the first quarter is expected to be in the range of $20 million-$21 million. Net interest income is expected to be approximately $0.4 million. As was the trend in the first quarter of 2021, taxes in the first quarter of 2022 are expected to be higher than the norm, with strong pipeline and backlog revenue mix for our connectivity products originating in France, which carries a higher corporate tax rate, and from utilization of withholding taxes in Israel. Last, share count for the first quarter is expected to be approximately 23.8 million shares. Rocco, you can now open the Q&A session.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Suji Desilva with ROTH Capital. Please go ahead.
Hi, Gideon. Hi, Yaniv. Congratulations on the results and the strong 2022 guidance. If you could go into the revenue there that you guided, and talk about what you think the revenue license mix is, and, you know, more generally, how should we think about the license model evolving here from what we've seen in the past?
I mean, what we are seeing is strong interest in Wi-Fi, and we mentioned Wi-Fi 7. Wi-Fi 6 is the mainstream one. We start seeing people are looking for Wi-Fi 7. It's hard to find even semiconductor company that offer Wi-Fi 7, and we are in a position to offer it. 5G, we mentioned in the call, a very large agreement that we did in the broadband IoT. Broadband IoT is everything that outside of the mobile. We are extremely optimistic about the Edge AI market. We came out with a fantastic product, which we call NeuPro-M, and we already, in the beginning of the quarter, signed a lead customer for the Edge AI.
The fourth anchor in our business is everything that relate to wearables and hearables, so TWS headsets, gaming headsets, watches. When you look on the composition, at least what we see today, these are the four large anchors. On top of it, we have what Intrinsix's bringing in. It's a solid customer base. There's a pretty large customer base, very loyal. With them, we are offering also to customer integrated IP solution. Integrated IP solution is a sizable agreement. It's the IP plus the designs that Intrinsix can do, and we basically adopting what in the semiconductor call semi-custom. We're doing IP version of the semi-custom, and the outcome is large deals.
Overall, you see a step up in the licensing that is not because of M&A and activity, just a matter of growing activities and interest from customers.
Okay. Then the license for 2022, would you expect it to start becoming more lumpy given the use of Intrinsix? Just to understand that dynamic.
Well, you know, licensing in general is lumpy. The idea is to have a large pipeline and to try to see on a yearly basis that you are doing. I don't anticipate. You know, you know us for a while, and we don't.
Mm.
We didn't come out with big surprises in licensing. I think the way we see it now, it's this will be the case in 2022.
I would add that for the beginning of the year, we're looking at a very strong pipeline and backlog for the beginning year of 2022, with some deals that are already signed in the quarter. At least the beginning looks quite robust.
Okay, great. One quick follow-up perhaps for you, Yaniv. The gross margin for 1Q, you guided 82%. For the full year, you guided 82%-84%. What are the drivers of expanding gross margin through 2022? Thanks.
Sure. A lot of it comes from the royalties. Obviously, the royalties is the high margin business and the lucrative part of our business. We see that ramping up towards the later part of the year with more base station activity and newer markets and newer players that should come into production with us in the second half of the year. That's one technical contributor. The others, it's just. That's more or less the changes because the licensing, as we said earlier, it's more or less the same. Sometimes one quarter could be stronger with a larger deal or versus the other, but there's nothing that dramatic or changes from the cost of that business. Technically, it's the royalties that set the tone for the gross margin.
Okay, thanks, Gideon. Thanks, Niv. Congratulations again on the progress.
Thanks.
Thank you.
Our next question today comes from Tavy Rosner with Barclays. Please go ahead.
Hi, this is Chris Reimer on for Tavy. Thank you for taking my questions. You mentioned some of the potential from the Intrinsix integration beginning well ramping up through next year. Can you just talk a little more about that and what you're most excited about in terms of revenue drivers into next year?
I believe you ask about the integrated IP solutions.
Mm-hmm.
That's the question. First of all, last year we signed the first agreement in this category of business. The idea is to come to the customer with the IP that we have, and you know that we have a pretty broad portfolio of IP, and take care of not just providing the standardized IP, but the whole platform for the customer. There are many, especially OEM side, that they want to go fast into the market and still lack the experience of building a SoC and embedding IP in SoC.
They are coming and say, "Okay, let's build a business model that we do not just give you the IP, but also do the whole design of your section or chip." The benefit for us is that we get larger share of the wealth that come out of it, so in terms of license and royalties.
What Gideon is saying that.
Mm-hmm.
We acquired Intrinsix or so months ago, but we already in the second quarter they were with us. We were able to change some of their business model and also collect royalties for those services. That's what that was the first step, and it's already in design, and we should be getting the royalties in the future. We want to take this to another level with adding much more of CEVA's technologies on top of Intrinsix's and doing this combination.
Mm-hmm. Okay, got it. Just looking into M&A, I don't know if it's on the table just now, but do you have anything maybe in the pipeline or are you comfortable with where you are from a technology standpoint right now?
No, I think we've made a lot of achievement. If you look at the licensing, the revenues over the last couple of years, that's the answer to the question of do we have enough technologies or are the technologies in the interesting and growing the markets in the world today, in the semi world, in the digital era that we talked about in the prepared remarks. If you look at the.
Mm-hmm.
In that aspect, I think we are doing all the right things. Obviously there are more technologies out there that we're focusing on, whether it's next generation or new things. We're not done with it. We'll continue to
I should add to this. Then when you do a licensing, it's just the first part of the success because this should be followed with royalties. When you look for the last few years, we are growing the licensing consistently. You look last year on the royalties that coming from this licensing, what we call the base station and IoT, that's 29% year-over-year growth in royalties, and we are talking about 1.3 billion units. I think it's 61% year-over-year unit growth. That's how this virtuous cycle works, this is how it should work. You know, you grow the licensing and in two years further, you see the royalties.
Mm-hmm. Got it. All right. Thank you very much. That's it for me.
Thank you.
Our next question today comes from Matt Ramsay with Cowen and Company. Please go ahead.
Yeah. Hi there. This is Ethan Potasnick on for Matt Ramsay here. Congrats on the great quarter. I wanted to.
Kind of drill into the full year 2022 guide a little bit more. This is a bit broad, but could you guys discuss where you guys see most of the upside coming from? You know, if you could kind of parse the origins of that growth between handsets and 5G. You guys gave some positive commentary out of some signals from China or is that Intrinsix or a mix between those sort of things? Thank you.
Let me try, and he will add his perspective. When you look on the licensing, it's we mentioned earlier, I think it was Suji's questions about all those drivers. We expect growth in this licensing. We have the product, we have the customer base, we have the market position and that's good because this create the next cycle support. Now, in terms of royalties, I would say in the base station and IoT is a solid growth. We have all, you know, it's combination of new products because we have so many customers in the pipeline that start to ship.
Things that we see in the position that we have is in smart TV, PC, earbuds, this will be volume driven. Also, in the 5G base station RAN, last year when it comes to China, was kind of a pause in terms of capital expenditure, but it looks like and we get two data points, ZTE, a much larger win rate in China Mobile, China Unicom. The XC16, which is the next new chip that they roll out for field testing. That gives us some indication for a renewal expenditure in China more into not just the urban one, but rural and also industrial robotics. They want to install, they want to rely on 5G.
We have another customer that's showing production ramps, and that's the 5G in mobile. We believe 2022 will be the bottom when it comes to this large OEM that moves to 5G, which is not this technology. On the other hand, we have other customers in this area. I think the other customer that we have in the handset in the baseband side will benefit from the move of 5G from high tier to the low tier, where this is their sweet spot. We have signed up, and that's something that we want to emphasize while we are here, that CEVA's play in 5G handset is not just in the baseband processor.
We have customers that license our connectivity, Wi-Fi and Bluetooth, so they're going to use our connectivity IP for handset. One is already shipping, the other one is in design. That will be another angle that we see materialize in the year or early next year. That's when it comes to the royalties. Base station IoT growing, cellular a bit mixed bag. Still, we believe when it comes to the key customers, it's low, but the other customers likely to ship more than 2021.
Okay, great. Very helpful. As a follow-up, you know, while not generating a ton of royalty revenue currently, we've kind of seen some great progress for the burgeoning opportunities in auto. Now with this sizable AI, ADAS-based agreement you guys called out in the prepared remarks. I was wondering if you guys could expand a little bit more on auto, given some of the more accelerating trends we are seeing out there today.
Yeah. You mentioned those. Beyond 5G and Wi-Fi, which you know is extremely big and vibrant, ADAS is a growing market. We see very interesting OEMs and Tier 1 talking to us about chips that they want to make, talking about our AI, in particular the new generation. But this is, as you know, automotive. It's a longer cycle. And a lot of things will happen, and we need to build the first license before start talking about royalties. Royalties is more 2025, 2026.
Okay, great. Thank you.
Thank you.
Our next question today comes from Martin Yang at Oppenheimer. Please go ahead.
Hi. Thank you for taking my question. My first question is on your 2022 outlook. Embedded in the guidance is roughly mid-teens growth. Do you expect Intrinsix? How do you expect Intrinsix to grow comparing to the other parts of the business?
Yeah, you know, we opened up Intrinsix for this year because it was new and it was only for seven months and tried to get it to quantify that add-on to CEVA because it was something unique that we took an extra step on. Going forward, as we explained here multiple times, I think in the prepared remarks and even the achievements so far with this ISP integrated service.
IPS.
IPS sorry, solutions is that we see Intrinsix today as part of CEVA. We see the IP offerings to semis and to OEMs today is a much more richer content. It's not just the pure IP. Most of the public companies that deal with IPs today do this and offer other services and other design wins and more help to the customer for revenues. Obviously, these are larger deals and bigger opportunities and potentially with new customers that don't have the bandwidth to design their own chip. But if you could design a block for them or the chip for them, that opens up a new market that CEVA before that did not have. Going forward, I don't think we're gonna break down Intrinsix to the different segments of CEVA.
You know, from time to time, maybe we give some qualitative data like we did on the base station, on a non-handset market that we are active in. If we win some interesting deals or some interesting design wins that we'll highlight them. I think one of the most interesting one is the one that we talked a few minutes ago about adding for the first time, not just chip design services, but also royalties for their end market.
If that's part of the CEVA business going forward, larger deals with the licensing element, with an NRE element, and with an ongoing royalty element, so we are tied and could come back to the next generation and be part of the next generation chip, both design and an IP offering, that again, new royalty stream, that overall strengthens the CEVA story, and this is how we believe is the right way to approach the semi space today. I hope that answered your question.
Yes, understood. My next question is about, you know, any potential impact you see in the first calendar half on the supply chain shortages that may affect your outlook for royalty revenues.
Well, you know, we've been two years now in COVID. There's a lot of buzz and a lot of issues around supply chain, but we haven't seen really any effect or minimal to be more precise effect with one or two customers that guided lower last year due to chip design. You may have seen that more in the low-cost 2G phones, the feature phones. I think there was much more focus on higher end devices last year and maybe those types of products in the emerging markets got less attention in chips to build the model. Maybe we saw it a little bit in the base station side as well. But we haven't seen that as a problem. Hopefully 2022 clears out more faster than it was in last year.
We haven't seen any real effect yet, at least significant ones by any of our customers.
Got it. Thank you very much.
Ladies and gentlemen, this concludes our question- and- answer session. I'd like to turn the conference back over to Richard Kingston for closing remarks.
Great. Thank you. Thank you everybody for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form 8-K and accessible through the investor section of our website. With regards to upcoming events, we will be participating in the following conferences, the Susquehanna Virtual Technology Conference, March 3rd and 4th, and the 34th Annual Roth Conference, March 13th- 15th in Dana Point, California. Further information on these events and all events we will be participating in can be found on the investor section of our website. Thank you and goodbye.
Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.