ARM forecasts increases in licensing income thanks to new chipset architecture

ARM Holdings, the British chipset design giant, posted a better than expected 25 percent jump in fourth-quarter profit. The company, whose architecture is used by the likes of Qualcomm (NASDAQ:QCOM), MediaTek and many others, said it expects its royalty income to get a boost from new smartphones.

ARM's designs were used to produce around 3.5 billion chips in the fourth quarter. The company posted a pretax profit in the period of around $181 million (£118.9 million), compared to analysts' estimates of $172 million. ARM's revenue jumped 19 percent to around $344 million and was split evenly between licensing and royalties.

Reuters noted that ARM CFO Tim Score said the company has seen strong demand to license its newest technology, which is currently in a handful of premium smartphones including the iPhone 6. "Following the acceleration in royalty revenue growth in the second half of 2014, and with a wide range of OEMs (manufacturers) introducing products based on ARM's V8 architecture this year, the outlook for royalty revenues this year is very encouraging," he said.

Earlier this month the company unveiled its new Cortex-A72 processor, based on its ARMv8-architecture. ARM said it is more than three times more powerful than its current designs while using 75 percent less power. ARM expects that architecture to be used for chipsets in upcoming high-end phones. "Most of the benefit we are going to see from the higher royalty rates is out in the future," Score told reporters. Article