Manufacturers continue investing in future

Figures from chip designer ARM shed light on outlook of troubled high-tech manufacturers

Despite the drastic downturn in the fortunes of high-tech companies, semiconductor makers and equipment manufacturers appear to be continuing to step up development for new products, according to a leading chip designer.

ARM Holdings, which sells chip designs used in everything from Nokia mobile phones to Microsoft PDAs to set-top boxes, says it is seeing undiminished growth in development systems, which are sold to manufacturers developing ARM-based products. The figures are a rough indicator that manufacturers are continuing to spend money designing consumer products that will appear on the market months or years down the line.

ARM had its best quarter yet for development systems in the first quarter of this year, but said on Wednesday that growth appeared to be continuing apace this quarter.

"We've still got strong sales this quarter. It shows OEMs [original equipment manufacturers] continue to invest in future products," Derek Morris, ARM's general manager of development systems told ZDNet UK. "We haven't seen much of a deceleration at all."

Sales of development toolkits and boards grew 186 percent from Q1 2000 to Q1 2001, Morris said, and grew 39 percent from Q4 2000 to Q1 2001. Sales were roughly evenly divided between the US, Europe and the Far East. Sales topped £6m in Q1 of this year.

Since late last year manufacturers have cancelled many orders for high-tech equipment such as computer chips and chipmaking equipment. This has meant financial troubles for such companies as chipmaker Intel and chip equipment makers ASM Lithography and Silicon Valley Group.

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