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ARM scooping in cash but remains cautious

From iPhone A4 and rivals' Snapdragon to washing machines

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ARM has outperformed estimates for the second quarter, increasing revenue by 18 per cent as its chips continue to be embedded in everything from mobile phones to washing machines.

More than a billion chips, based on licensed ARM designs, shipped during the second quarter of 2011. That pushed the company's pre-tax profits up to £54.2m on revenue of £117.8m, well above analysts' estimates of £45.3m. But the company is still cautious about the rest of the year, with its own predictions for the whole of 2011 unchanged.

ARM chips form the heart of just about every telephone, landline or mobile, from the latest iPhone to the bargain-basement handsets. ARM makes a lot more money from the high-end chips in the latest smartphones, and is nervous of prevailing economic conditions that seem to dictate slowing smartphone sales as the year progresses. ARM's ubiquity should mitigate against that to some extent, but that won't boost the bottom line to the same extent.

The company also has aspirations in the server business, not to mention powering the much-hyped Chrome OS devices, which are expected to multiply over the next year or so.

ARM doesn't make chips, it only designs cores which can be incorporated into system designs. Older ARM chips turn up all over the place, but it is the more recent designs which attract a premium.

The A4 chip, inside the iPhone, shares a recent ARM core with Qualcomm's Snapdragon, so despite the fact that the two processors have little else in common, ARM makes money from both of them. ®

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