Arm goes after Intel's heartland as profits lift in the third quarter
Chip designer expects $763m full-year revenues as business expands into white goods and cars
Nick Clark is the arts correspondent of The Independent. He joined the newspaper in June 2007, initially reporting on the stock markets. He has covered beats including the City, and technology, media and telecoms and made the switch to arts in December 2011. He has also contributed articles to the sports section.
Wednesday 26 October 2011
Arm Holdings said it would take the battle to Intel in its core market as the British computer chip designer revealed its best ever quarterly results. It shipped more than one billion chips for mobile phones and portable computers during the period.
The chief financial officer, Tim Score, said: "Arm is moving into Intel's more traditional space. There will be a market share shift and we are in a better position to take share from them, rather than the other way around. Arm's technology is becoming applicable to the whole computing spectrum."
The Cambridge-based company is expanding into desktop servers and PCs after its chief executive, Warren East, said the "blurring" between computers and smartphones "is helping us get into computing". Last month, Microsoft said that Windows could run on Arm chips for the first time.
Intel has been keen to break into the smartphone and tablet markets. At the same time as its rival's revelation, it announced a deal with Google to make chips for devices using the Android operating system. Arm Holdings, which is listed on the FTSE 100 index, released its third-quarter numbers yesterday. Pre-tax profits beat expectations and rose by 44 per cent to £55.8m, after it signed up 14 new customers to its processor licences. "These were very good results, especially strong on licensing," Mr Score said. "These are the best results we've ever put out, with record revenues and profits."
Paul Morland, an analyst at Peel Hunt, said the results showed that Arm had kept up its momentum since the first half of the year, while rivals such as Texas Instruments had issued more muted updates.
Arm said the number of its chips used in mobile devices was up 10 per cent year on year to one billion, with 900 million in household products from computers to washing machines. Its chips are used in smartphones including Apple's iPhone. Mr Score said the business for chips used in white goods and cars was growing. Management expects full-year revenues to hit $763m.
Arm's business model focuses on designing chips and licensing them to clients. It also receives royalty fees for the devices sold containing its processors. In the third quarter, licensing revenues rose and are expected to grow further in the next quarter. The only weak spot was royalty revenues, which were hit by "below seasonal growth" following the Japanese earthquake.
Mr Score said: "Arm is 20 years old. It has built an effective strategy on low-power, energy-efficient chips."
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