Chip firm ARM reaps profits of mobile boom

THE INEXORABLE rise of smartphones and tablets has lifted British chip designer ARM Holdings to record profits.

The Cambridge-based firm posted a 20 per cent rise in annual profits yesterday, as orders for its latest technology leapt. ARM’s chip designs, which it licenses to manufacturers for a fee and for royalties, are used in the vast majority of smartphones and tablets sold worldwide, meaning that the global boom for these devices has shot the company to new heights.

ARM reported pre-tax profits of £276.5m for 2012, on a 16 per cent rise in turnover to £913m. The firm also signed a record number of licensing deals, suggesting strong revenues will continue in the years ahead.

Despite an expected slowdown in smartphone growth this year, ARM’s chief executive Warren East told City A.M. he expects another bumper year. “[Smartphone growth] was 45 to 46 per cent growth last year, and this year it’s predicted to be around 40 per cent. As long as it’s 30 to 40 per cent we are OK,” he said, adding that the company is continuing to develop to stay ahead of Intel, its major threat.

Intel, which designs and makes the majority of the chips in PCs, has repeatedly threatened to enter ARM territory to no avail. “Intel is a very well resourced company with very good technology, and they have to adjust to technological changes,” East said. “Clearly they need to adjust their strategy, but we’d be more worried if we had just stayed still.”