Rivals stay at Arm's length with 25% rise in profits

The chip designer's success has been driven by demand in the smartphone market, apparently. Although competitors haven't fared quite so well.

by Emma Haslett
Last Updated: 24 Apr 2012

If you’ve had enough of the gloom surrounding growth figures, this should put a smile on your face. Arm Holdings, the British company that designs microchips for all manner of large technology manufacturers, has done very, very well for itself. The company’s second-quarter figures show that revenues rose by 18% on last year’s figures, to £117.8m, while profits before tax were up by a quarter, to £54.2m. Not bad…

The interesting thing about Arm is that it doesn’t actually manufacture anything. Instead, all its products are designed in-house, and are then licensed out to larger firms, who take care of the pricey manufacturing bit and then put them into their gadgets. Its list of clients reads like a Who’s Who of technology: everyone from Apple, to Samsung, to Nokia and (semiconductor company) Texas Instruments use its designs. Which means that the upsurge in demand for smartphones has done it an awful lot of good.

So it’s no surprise that Arm’s management is pretty optimistic about the future of the company. Apparently, it signed 29 new processor licenses in the second quarter, meaning, as FD Tim Score put it, ‘Arm technology [is] getting designed into broader and broader addressable markets’. Or (if you don’t speak engineer) its RISC chips, which are powerful but easy on battery power, are being put into more and more consumer products.

Of course, where smartphones are concerned, there are still worries about the state of the market, not least because consumers are struggling to afford to eat at the moment, let alone fork out £400-odd on a shiny new gadget. That’s hit the likes of French rival STMicroelectronics (Europe’s largest chipmaker) hard: the company saw its shares fall by 8.3% this morning after it failed to meet analyst expectations because of dwindling sales at Nokia. And Blackberry maker Research In Motion also reported difficulties earlier this year.

Still, Arm maintains that where it’s concerned, that simply isn’t a problem. ‘The more competitive the environment, the better it is for the Arm business,’ said Score. ‘We don’t pick winners’. Very laid back.

- Image credit: Flickr/Player Sekwent

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