Tech woes deepen as ARC fails to hit sales targets

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The Independent Online

ARC International, the British microchip designer, deepened the gloom in technology markets yesterday after admitting that it will miss second-quarter and full-year forecasts because crucial orders have not materialised.

Shares in ARC, floated at 210p each in September, plunged 23 per cent to a new low of 47.5p. Its warning damaged confidence in rival chip designers ARM Holdings, down 14.5p to 203p, and Parthus Technologies, which fell 3.5p to 45.5p.

London's technology-laden FTSE techMARK 100 index fell 46.09 points to a new low of 1554.69 points after ARC's revelations and a profits warning on Thursday from US semiconductor giant Advanced Micro Devices, world-leader Intel's biggest competitor. The Dow Jones index finished down 227.2 points at 10,252.7.

Bob Terwilliger, the chief executive of ARC, admitted that the company had suffered a dire few weeks of trading and said it would not reach its target of increasing sales by 80 to 90 per cent this year.

It was a dramatic turnaround in company's fortunes. Just two months ago the chief executive reaffirmed that ARC was on track to meet expectations and said its business model limited its exposure to the technology slump. ARC does not manufacture chips in house, preferring to license its technology to clients who then use it to customise their own microprocessors.

"The slowdown in the semiconductor industry has resulted in customer hesitancy over concluding licence agreements," said Mr Terwilliger. "During the critical final days of the quarter, when normally many licensing agreements are concluded, a number of deals were not confirmed."

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