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ARM posts 44 percent increase in profits

Thanks to smartphone and tablet surge
Tue Apr 23 2013, 10:37
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CHIP DESIGNER ARM has posted a 44 percent increase in profits to £89.4m for the first three months of 2013.

ARM, which licenses chip designs to scores of chip vendors, has been riding the smartphone and tablet boom in recent years. The firm's first quarter 2013 financials highlight the growth in consumer gadgets, with revenues rising by 26 percent to £263.9m and profits increasing by a very impressive 44 percent to £89.4m.

There is very little in ARM's latest financial report that reads badly, even the firm's operating margin rose from 44.5 percent in the first quarter last year to 50.5 percent this year. The firm said 2.6 billion ARM based chips were shipped during the first quarter, a 35 percent increase from the same quarter last year.

Warren East, the outgoing CEO of ARM said, "ARM's royalty revenues again outpaced the wider semiconductor industry. This out-performance has been driven by market share gains in key end markets including digital TVs and microcontrollers. In addition, the growth in smartphones and tablets continues to benefit ARM.

"Even low cost smart devices can contain multiple ARM-based chips and be based on ARM's advanced Cortex A-series technology and Mali graphics processors."

ARM's financials are in stark contrast to those of Intel. Last week Intel reported a 25 percent drop in profits as it battles against falling PC sales and seeks a foothold in the smartphone and tablet markets.

On the other hand, ARM's dominant position in the smartphone and tablet markets looks to be rock solid, with customers such as Apple, Nvidia, Qualcomm and Samsung all producing chips that use its technology. ARM is also trying to break into the server market, which Intel dominates, and the firm said it signed up additional licensees for its ARMv8 architecture.

ARM's strong financials highlight the problems faced by semiconductor firms that rely on the PC industry. The company's 44 percent increase in profits show Intel how much cash it is missing out on by not having moved into the mobile electronics market sooner. µ


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