Internet of things and wearables drive growth for ARM

Second generation of internet of things and wearables, plus enterprise networking boosts profits at chip designer.

Interest in the internet of things, wearable devices and enterprise networking have helped boost profits at chip designer ARM.

The company said 2.9 billion ARM-based chips were shipped by its customers in the first quarter of this year, up 11 percent year-on-year, and said it had seen strong year-on-year shipment growth especially in enterprise networking and microcontrollers which grew 150 percent and 40 percent respectively. Revenues hit $305m for the quarter, up from $263m on the same quarter a year ago.

ARM's processor technology is used in 95 percent of smartphones and 80 percent of digital cameras, thanks to their low power requirements. But its use is spreading - Microsoft's Surface 2 runs on ARM while the company is increasingly targeting enterprise servers and the datacentre as well , although the technology's move  into servers has  not been smooth sailing .

The company said customers have signed 26 new processor licences. Six were for ARM's Cortex-A series processors which are used in smartphones and tablets. Five of the licences were for ARM processors based on the ARMv8-A architecture including the Cortex-A53 and Cortex-A57 processors bringing the total number of licence for this technology to 43.

Four licences were for ARM's Mali graphics processors used in digital TV, mobile and embedded computing, and 11 were for Cortex-M class processors for use in microcontrollers, smart sensors, and IoT and wearable technology, including four new licensees.

ARM CEO Simon Segar said these Cortex-M chips "can be found in most of the internet of things and wearable devices that have been announced to date".

He added: "We are now seeing the second generation of wearable and internet of things devices: they are well thought through in terms of design have good build quality of hardware and provide easy to use software services. This is still a very fragmented end market but with many of the chips going into these devices being based on ARM the benefits of our ecosystem make it easier for developers to create new products."

While the smartphone market in the US and Western Europe is slowing as it reaches saturation there is still plenty of growth in developing markets albeit at a lower prices. If the internet of things or wearable devices take off on any scale these markets are also going to need plentiful low-power chips which is what ARM specialises in.

ARM said the semiconductor industry normally dips in the first quarter of the year before picking up and noted: "Recent indications from the semiconductor industry and ARM's customers suggest that ARM will benefit from an improving environment in the second half."

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