Shares in the microchip designer Arm Holdings climbed to a 13-month high yesterday. The company revealed a record-breaking quarter, thanks in part to the success of Apple’s iPhone in China.
Arm, whose microchip designs are found in 95 per cent of smartphones, revealed a 25 per cent jump in fourth quarter profits to £118.9m and a 19 per cent rise in revenues to a record £225.9m. Full-year figures beat City expectations, with an 11 per cent rise in revenue to £795.2m and a 13 per cent improvement in pre-tax profit to £411.3m.
In the fourth quarter alone, 3.5 billion Arm-based chips were shipped, as one of Arm’s key customers, Apple, sold 74 million iPhones thanks to a spike in demand in China. Apple also became the first US company to reach a valuation of $700bn (£460bn).
However, Simon Segars, Arm’s chief executive, highlighted a shift away from a dependence on mobile, which will please investors who worry a slowdown in smartphone sales could hit the company. Mr Segars said: “Of those 3.5 billion chips sold… just under half were in mobile devices. The other half were in embedded technology, networks and consumer electronics.”
Mr Segars said Arm was investing heavily in developing new technologies for application in areas such as healthcare, having hired 461 new staff in the past year.
“We can see the opportunity in front of us and believe it’s the right thing to do to invest,” he said.
Mr Segars played down the launch later this year of the Apple Watch, which will use Arm technology, saying: “It’s obviously a very hotly anticipated product and there’s a lot of interest… But it’s an example of wearable technology and wearables as a trend has been out there for a few years now. I think there are many ways in which wearables are going to evolve.”
Investors should benefit from Arm’s blockbuster performance, as the Cambridge-based company announced a 25 per cent rise in its final dividend to 4.5p. Arm shares rose 31p to 1,087p.