Arm Q1 profits double, but competition looms

Arm, the UK chip company whose designs are used by Apple in the iPad among other devices, has unveiled encouraging results with a nearly doubling of profits in the first quarter of 2010.

Growth prospects look good for Arm as it eyes the smartphone segment and the nascent market for larger screen devices such as slates and tablets that many analysts foresee exploding in the wake of the launch of the iPad.

Arm, whose chip designs are used in 95 per cent of mobile phones in the world, said chip sales based on its designs increased by 50 per cent in the first quarter of 2010 compared to the same period last year. Sales of smartphone chips based on Arm's designs alone increased by about 30 per cent to 40 per cent. Such is the company's confidence that it announced plans to hire about 100 more engineers this year.

But one threat does loom for Arm in the shape of Intel. The US giant's chips are gradually appearing in smaller devices as it expands from its stronghold in PCs into high-growth segments. Much debate in the industry has focused on where the new centre of gravity will fall. If it is in slates and tablets then Arm has its relationship with Apple and the iPad (Arm dismissed recent rumours of takeover interest from Apple) but Intel will be buzzing around that segment too.

Arm's pre-tax profits for the three months to the end of March were £25.9 million against £13.1 million in the same period last year. Revenues grew 16 per cent to £92.3 million.

For more on this story:
Financial Times

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