ARM chip dominance defies market slump

The UK chip designer continues to see strong revenues from its dominance of mobile phones and handheld computers

UK chip designer ARM Holdings is continuing to thrive despite the continued slump in the IT market, and on Monday announced 42 percent revenue growth for the three months ended 30 September.

The results arrive on the back of several high-profile deals for the company, whose designs run in a variety of portable devices like mobile phones and handheld computers. Intel and Texas Instruments both reaffirmed long-standing relationships with ARM and Microsoft shifted the new version of its PocketPC operating system to ARM-based processors.

Revenues were up 42 percent from the same quarter the previous year to £37.6m, or 4 percent up from the previous quarter. Profits before tax were up 46 percent from the same quarter last year, to £12.9m. That figure is 6 percent up from the previous quarter.

For the nine months so far this financial year, revenues were up 50 percent from last year to £106.1m.

"Despite difficult market conditions in the electronics industry, our business continues to deliver strong performance and we continue to experience high demand for our products and services. We were encouraged to see that unit shipments grew, driven by a further five partners commencing shipments in the quarter to 30 June," said executive chairman Robin Saxby in a statement.

Royalty revenues held steady from the previous quarter at £6.4m, or 17 percent of total revenues. They accounted for 28 percent of revenues in the third quarter of last year, or £7.3m.

The sale of development systems, which chip companies use to design their products, rose sharply from last year to £5.3m for the quarter. That compares to £3.8m for the same quarter last year. However, the figure was slightly down compared to £6m for previous quarter this year.

Service revenues were down from £5.1m at the end of the second quarter to £4.1m at the end of the third quarter.

ARM also announced a reshuffle of its board of directors, which sees Robin Saxby becoming executive chairman, Warren East becoming chief executive, Tudor Brown replacing East as chief operating officer and chief technology officer Mike Muller joining the main board.

Besides the deals with Intel, TI and Microsoft, ARM also formed an alliance with Sun Microsystems in June to create a standard for mobile computing platforms. The deal hinges on ARM's licensing of Sun's Java programming language for its chip designs.

ARM is increasingly becoming a de facto standard in the mobile world. All PocketPC systems now run on Intel StrongARM processors and Palm Computing, currently the dominant PDA maker, has begin the initial stages of porting its operating system to ARM.

In August ARM revealed more details of its next core design, ARM10.

ARM sells its products to chip companies, rather than to the end market. It has been insulated from market problems to some degree because hardware companies tend to spend as much or more on research and development during an economic downturn.

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