Arm Holdings profits up over 40%

ARM Holdings

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Arm Holdings, which designs chips used in smartphones such as iPhones, has seen its profits rise after agreeing more deals to licence its designs.

The firm's pre-tax profits rose 42% to $49.7m (£31.4m) in the last three months of 2011 compared with the same period in 2010.

A record 2.2 billion chips using Arm technology were shipped in the period.

For the whole of 2011, Arm Holdings' pre-tax profits rose to $156.9m, up 42% from 2010.

"In Q4 and throughout 2011 Arm has seen strong licensing growth, driven by market-leading semiconductor companies increasing their commitment to Arm technology, and more new customers choosing Arm technology for the first time," said chief executive Warren East.

"We have also seen our royalty revenue continue to grow faster than industry revenues as the Arm Partnership gains share in our target markets."

The firm agreed 25 new licenses in the three months to the end of December 2011, including a deal with networking semiconductor company, LSI.

Analyst reaction to the results has been positive.

"Against a weak industry backdrop, Arm's core business royalty revenue accelerated 23% year-on-year versus 20% in the third quarter, which we believe reflects the strength in ordering for smart-phone components in the third quarter results of semi[conductor] companies," said Gareth Jenkins at UBS.

Competing chips

The Cambridge-based firm faces new competition from Intel which released its updated Medfield processor this month.

The Medfield processor is made to be used in smartphones and its design uses less energy than the processors that Intel usually makes, which are aimed at desktop PCs.

Mr East told the BBC on Tuesday that he was not particularly worried by Intel's planned expansion into Arm's mobile chip market.

"Intel are, of course, very strong in PCs and sell several hundred million chips every year, but last year Arm partners shipped almost eight billion chips and that's a measure of Arm technology being used in a much wider range of products," he said.

Last year Arm shares jumped after Intel's long-term partner, Microsoft, announced it would start to design mobile applications around the Arm chip architecture.

Arm shares rose 7% in London on Tuesday after the results were released.

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