Mobile Internet and Bluetooth boost Parthus

Chip designer benefits from 'feverish' chip makers' research budgets
Written by Matthew Broersma, Contributor

Irish chip designer Parthus said on Tuesday that it is still on track to reach profitability in 2002 despite the economic slowdown that has mauled most high-tech companies. The company reported that revenues grew 30 percent year-on-year for the second quarter to $10.2m (about £7m) on the back of sustained interest in mobile Internet, handheld and Bluetooth products.

Parthus' results come a day after ARM Holdings, which also designs microprocessors for mobile computing, posted a 46 percent rise in second-quarter profits, beating analysts' forecasts.

However, Parthus admitted that the high-tech slump has "impacted Parthus customers this year", and would lead to further uncertainty. "This has clouded visibility over the next 12 months," the company said.

Parthus said its recent performance gives it "confidence that the company should meet its target of profitability in 2002."

The companies who manufacture semiconductors for mobile devices, such as Texas Instruments, Nokia, Ericsson, Intel and others, may have been landed with the chip industry's worst-ever year, but they have no plans to cut their research and development budgets. In fact, most of them see research as the key to returning to growth, according to analysts. "They don't cut back on product-based R&D," said Jim Tully, senior analyst with Gartner Group. "They want to get into a position where they have products that are better suited for the new market. Chip companies like to design their way out of recessions."

Designers are especially focused on the emerging markets of handheld computing and wireless data, Tully said. "Nokia, Motorola, Ericsson and others are feverishly designing new features into mobile phones, and that means they have to license the latest and greatest designs from Parthus and ARM," he said.

He also said that the demand for licensed processor intellectual property is growing at the moment, expanding from established markets like mobile phones into automobiles, networking products, smart-cards and other areas.

ARM designs low-power, high-performance microprocessors for mobile electronics, while Parthus designs complete solutions, often incorporating ARM microprocessors.

Parthus' total revenue for the two quarters ending 30 June increased 43 percent year-on-year to $19.9m, up from $14m last year. The growth was partly due to a licensing and royalty portfolio agreement signed in June with STMicroelectronics, Parthus' largest single agreement to date, to supply mobile Internet platforms and technologies.

Handheld computers contributed to Parthus' bottom line, with Sharp signing a deal in April to license Parthus' InfoStream platform for PDAs (personal digital assistants) and smartphones. Sharp makes PDAs itself, as well as supplying chipsets to PDA makers like Compaq and Palm.

In March, Hitachi licensed Parthus' BlueStream platform for Bluetooth chipsets. Bluetooth is a wireless technology for connecting computers and mobile devices. It is expected to approach critical mass this year, with mobile phone handsets and laptop computers hitting the market after long delays.

Parthus said that licensing and royalty revenues for the past quarter grew 95 percent year-on-year to $7.2m. Licensing and royalty revenues for the past six months grew 103 percent year-on-year to $13m.

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