ARM profit leaps 44% on strong licensing

Britain’s ARM reported a leap in profits off the back of strong licensing of its chip designs in the third quarter.

The company, whose processor architecture powers much of the mobile device market including Apple’s iPad and new iPhone 4S, reported a 44% rise in pretax profit to £55.8 million on revenue up 20% to £120.2 million, both ahead of analysts’ consensus.

“In the third quarter of 2011, 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 CEO Warren East. “Demand for our technology has come from a broad range of applications, from sensors to computers.”

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

East said ARM has seen a 50% increase of shipments into “non-mobile” markets, including TVs, controllers and networking devices.

“With customers looking to design ARM technology into a widening product portfolio, ARM is continuing to invest in the development of new products to drive long-term growth in our revenues, profits and cash,” he said.

ARM reports royalties a quarter in arrears, so it has less visibility on demand in consumer electronic markets than its chip-making partners such as Samsung and Texas Instruments.

The group, which recently unveiled its latest low-energy chip design, the Cortex-A7, said it signed 28 processor licenses in the quarter.

It said it had a healthy opportunity pipeline for licensing and a historically high order backlog, which pointed to another strong quarter for license revenue in its fourth quarter.