ARM sees 167pc profit spike after surge in demand for smartphones
Rising demand for smartphones, netbooks and tablet computers saw chip designer ARM Holdings deliver a remarkable 167 per cent year-on-year spike in profit.
The British company, whose designs are in more than 95 per cent of the world’s mobile phones, posted record pre-tax profit of £43.5m on revenue of £100m, both ahead of expectations.
The results were flattered by a catch-up royalty payment of $9m (£5.8m) for shipments of chips made between 2007 and 2010.
As well as smartphones, which can contain four or five ARM chips each, the Cambridge-based firm said its designs were growing share in consumer electronics and embedded products, such as machinery and appliances.
Chief financial officer Tim Score said new licencing deals with Freescale, Microsoft and TSMC would further increase its market penetration.
He said the group was in “good shape” on licencing, which accounted for 24 per cent of processor design revenue.
ARM licenses its technology to chipmakers such as Samsung, Toshiba and Nvidia and receives royalties of around 6.5p per chip shipped. Some 1.4bn ARM-designed chips were shipped in the prior quarter.
ARM signed a broad “architecture” license agreement with Microsoft on Friday, which could lead to the California-based firm designing its own chip. Apple developed the A4 chip based on ARM’s Cortex-A8 core for its iPhone 4 and iPad tablet computer.
Licencing fees from the multi-year Microsoft deal will probably start to be recognised from the fourth-quarter.