MOUNTAIN VIEW, Calif.--Microprocessor architect ARM Holdings plc announced Tuesday (Oct. 25) it had seen strong growth in the third quarter despite the global economic downturn thanks to a boon in new customers and an increase in the number chips based on its processor technology shipped.
ARM, whose processor technology can be found in anything from Apple iPads, to cars, to washing machines, said its third quarter revenue was up 20 percent to £120.2 million ($192.3 million), with pre-tax profit up 44 percent to £55.8 million ($89.3 million).
The company said it was also on track to meet market expectations of $763 million for full-year revenues.
ARM’s main source of income is the licensing out of its technology IP and the royalties (one quarter) derived from the shipment of each ARM-based chip shipped.
Some 1.9 billion chips based on ARM processor technology were shipped in the third quarter as the firm signed up 14 new licensees including established semiconductor companies who have long been stalwarts of the PC space, but who now appear to be mulling their mobile options.
“We saw a continued high level of design activity with many new customers licensing ARM technology for the first time, driven by end market requirements for smarter, low-power chips,” said ARM’s CEO, Warren East.
The firm said it currently offers 28 processor licenses for customers to choose from, giving companies the ability to use ARM based chips in a broad range of end-markets including automotive applications, computers, microcontrollers, mobile phones, enterprise networking, sensors and smartcards.
ARM said 9 Cortex-A and 14 Cortex-M series processor licenses were signed this quarter, and the firm also recently just announced its new Cortex-A7, a next generation processor designed to use around one-fifth of the energy of today's top-end smartphone processors.
In the third quarter, 1 billion chips shipped into mobile phones and mobile computers, up 10 percent year-on-year, while 900 million chips shipped into consumer and embedded digital devices, up 50 percent year-on-year, said the firm.
Mobile and tablet devices are seeing around 100 percent growth annually, while the PC market plateaus. The firm has also been given a boost from Microsoft, which announced earlier this year that its upcoming Windows 8 operating system would work on ARM-based chips. The Windows software stack had previously worked only on x86 hardware.
While the semiconductor industry seems to be having a difficult couple of quarters owing to the global financial crisis and an unstable macro-economic outlook impacting customer spending, ARM still believes it’s strongly positioned to pull through this period of weak demand and continue to see growth.
“Royalty revenues in Q3 have been impacted by the below seasonal growth in the semiconductor industry, but we continue to gain share,” said East.
ARM CFO Tim Score added that order backlog remained at an all-time high. "The below-seasonal growth within the semiconductor industry in Q3 may have an impact on ARM's Q4 royalty revenues, but we have a high level of order backlog and a strong opportunity pipeline for licensing," he said.
Despite the strong results and solid predictions, however, some financial analysts expressed disappointment that results remained in line with current market expectations rather than exceeding them.
The disappointment translated into a slight dip in ARM shares when the markets opened, followed by a recovery, with ARM shares up 2.16 percent to $28.32 at the time of this posting.