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ARM: We've signed 41 new deals and we are IN to the Internet Of Stuff

Profits up but royalties down in the Silicon Fen

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ARM Holdings has dodged the impact of slowing device sales with 41 customers signing new deals to license its chip technology.

The company Tuesday announced a nine-per-cent jump in second-quarter profit to £68m on revenue that climbed seventeen per cent to £187.1m. Earnings per share increased 11 per cent to £3.91.

But royalties for ARM chipsets from existing customers fell by nine percent for the period to June 30, to £80.3m under IFRS. ARM blamed the fall on “seasonal trends and inventory management in parts of the electronics supply chain,” saying the drop had been expected.

Away from the financial wizardry at ARM's Cambridge base, industry analysts have been charting a progressive slowdown in sales of smart phones and tablets.

The market for both is changing, as tablets reach saturation and customers shop judiciously and selectively for a second tablet for them or the family.

On phones, the growth is in low-priced handsets, mostly sporting Google’s Android operating system.

Device makers are investigating new form factors in all cases, around different screen sizes, as phones adopt more tablet-like sizes and features.

ARM has 90 per cent of smart phones and 31 per cent of devices, licensing its designs to Qualcomm, Nvidia, Texas Instruments and Broadcom among others.

Optimistic ARM chief Simon Segars said the 41 deals in the second quarter were driven by demand for ARM technology in a range of areas – devices, embedded, consumer electronics and, yes, Internet of Things.

Total technology licensing for ARM was up 36 per cent to £89.6m for the quarter.

“Our continued strong licensing performance reflects the intent of existing and new customers to base more of their future products on ARM technology,” Segars said in a statement. “This bodes well for growth in ARM’s medium and long term royalty revenues.” ®

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