Smartphone sales help ARM posts record profits

 

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By Reuters

Posted on 27 Jul 2010 at 12:00

Chip designer ARM has smashed profit expectations in the second quarter, helped by strong demand for smartphones, netbooks and tablet computers.

The British company, whose designs are in more than 95% of the world's mobile phones, posted record pre-tax profit of £43.5 million, up 167%, on revenue of £100 million, both ahead of expectations.

The results were flattered by a catch-up royalty payment of $9 million 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 market share in consumer electronics and embedded products, such as machinery and appliances.

New licensing deals with Freescale, Microsoft and TSMC would further increase its market penetration, Chief Financial Officer Tim Score added.

"ARM continued to gain share in the quarter with shipments of ARM-based chips growing faster than the industry in all target markets," the company said.

ARM licenses its technology to chipmakers such as Samsung, Toshiba and Nvidia and then collects royalties, recognised a quarter in arrears, of an average of about 10 cents per chip shipped. Some 1.4 billion ARM-designed chips were shipped in the last quarter.

Score said trading conditions had improved strongly in the first half of 2010 after a challenging 2009, and the group was confident it would meet expectations of full-year revenue of about $584 million, excluding the royalty catch-up.