LONDON ARM Holdings plc has managed to grow dollar revenues by 11 percent in the first half to $258.4 million in what the company describes as "a challenging industry backdrop" and said it is on track to achieve full year estimates provided the dollar/sterling exchange does not change significantly.
Warren East, the company's CEO, said the semiconductor industry's revenues grew by less than 5 percent in the first half of the year compared to the same period last year.
Dollar revenues in Q2 2007 were $129.2 million, up 8 percent on Q2 2006 and at a similar level to last quarter. Sterling revenues of £65.5 million were flat year-on-year after an 8 percent weakening of the dollar against sterling ($1.97 in Q2 2007 compared to $1.82 in Q2 2006).
ARM says at the Q2 2006 effective rate, Q2 2007 sterling revenues would have been £70.9 million.
Income before tax for the first half of the year was almost the same as the corresponding period last time at £22.5 million ($46.1 million).
"A record quarter for licensing of ARM processor technology in Q2 enhances our prospects for further penetrating mobile and non-mobile markets in the future. In addition, good revenue growth and continued cost discipline have enabled us to increase profitability despite the continued strong currency headwind," said East.
Licensing revenues at the processor division for the second quarter were $45.3 million, up 26 percent on the corresponding period in 2006, but revenues from royalties were flat at $40.2 million. ARM says royalty revenues were "impacted by normal seasonality, the industry inventory correction and lower utilisation rates in the foundries."
It added royalty revenues are expected to pick up in the second half as the impact of the inventory correction reduces, foundry utilisation rates increase and the momentum behind smart phone sales gathers pace.
ARM (Cambridge, England) also said it has signed its first 45-nm physical IP with a non foundry customer. The company said that even though the un-named customer is not a Tier 1 IDM or large fabless customer, "the license demonstrates the growing market for physical IP outsourcing that ARM expects to penetrate over time. We continue to be engaged in technical and commercial discussions with a range of customers over physical IP outsourcing and are confident of achieving our long-term goal of a significant portion of the physical IP market being outsourced."
Though in the past six month, the number of people employed full time increased by only 22 (to 1,680), headcount increased by 48 in India and China and decreased by 26 in the rest of the world, illustrating a significant regional re-balancing at the company.
At the end of Q2, the group had 664 employees based in the UK, 535 in the US, 178 in Continental Europe, 239 in India and 65 in the Asia Pacific region.