ARM’s storming sales defy fears of slow growth

ARM HOLDINGS continued to blow away expectations yesterday, as the chip designer shrugged off fears of slowing smartphone sales growth to post a 44 per cent rise in profits.

The FTSE 100 company, whose processor designs are used in 99 per cent of the world’s smartphones and tablets, saw its shares leap by 10.5 per cent as it posted sales of £170.3m for the first quarter of 2013.

This was 28 per cent up on the same period last year, as ARM assuaged fears that margins would be hit by rising sales for cheap smartphones as growth in western markets slows.

Growth in global smartphone sales is set to decline for the first time in 2013, from around 45 per cent in 2012 to 40 per cent this year, as developed economies move closer to saturation.

This has hit confidence in handset makers such as Apple, but ARM’s chief executive Warren East said that cheaper smartphones were still a lucrative business, and pointed to growth in chips for embedded devices – internet-connected everyday objects such as cars and washing machines. “The ARM story is about much more than mobile,” East told City A.M.. “In embedded devices we are going to see increases where [basic] chips are being replaced by smart technology.”

The Cambridge-based firm said that shipments of chips for embedded devices had risen 50 per cent year-on-year, compared to a 25 per cent rise in chips for smartphones and tablets.

Pre-tax profits rose from £61.9m last year to £89.4m, as ARM gears up for East to step down after 12 years at the top. He will be replaced by company president Simon Segars in July.