ARM Holdings makes big money from phones

ARM Holdings, the manufacturer whose chips are incorporated into nearly every smartphone, reports that its pre-tax profits for the third quarter more than doubled compared to the third quarter of last year, due to a 20pc increase in revenue, more than the company had projected.

Its profit of £43m, compared to £19.6m last year, came on the back of £120m in revenue. The biggest share of the increase came from the Processor Division licensing revenue, which grew 43pc to £37.8m.

The CEO of ARM Holdings, Warren East, said: “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.”

ARM shipped one billion chips for mobile phones and mobile computers in the quarter, a 10pc increase over last year. ARM’s chips are incorporated into the Apple iPad and other tablets.

The company is seeing growth in the non-mobile market as well. The number of chips shipped for digital devices such as desktop PCs and digital TVs increased 50pc compared last year to 900 million.

The strongest growth came in their microcontroller line. Shipments of microcontrollers increased 80pc over the third quarter of last year. By contrast, the entire microcontroller market increased by less than 10pc. After a drop this morning, ARM’s shares rose 10.75p overall to 586.3p in afternoon trading.