ARM revenues up 22 per cent as smartphone and tablet sales soar

ARM has posted third-quarter revenues of $192m, a 22 per cent rise year on year, helped by bumper sales of smartphones and tablets.

The Cambridge-based firm also revealed that it shipped a total of one billion chips in mobile devices during the quarter, a 10 per cent rise year on year, with 28 processor licences signed in the quarter.

Of these agreements 14 firms were licensing ARM chips for the first time, while 26 companies signed deals to use the popular Cortex and Mali graphics processors.

The increase in licensees highlights a shift in the market towards high performance, low-power chips, ARM chief executive Warren East said.

East also noted that ARM has seen strong growth in non-mobile markets such as digital TVs, microcontrollers and networking applications.

Although the year-on-year increase was steep, quarterly profits saw only a marginal rise, up from $190.2m in the second quarter. ARM said that its royalty revenue ($96.8m) was affected by the Japanese earthquake, which hit energy supplies and the semiconductor supply chain.

However, the results cemented ARM's place as one of the most successful technology firms in the UK, continuing to flourish in tough economic conditions where even stalwarts such as IBM, Microsoft and Nokia have struggled.

Another indicator of its success is the growing number of employees. The firm is currently home to 2,039 full-time staff, an increase of 150 since the start of the year, and recruiting is expected to continue during the fourth quarter.

Unsurprisingly, the outlook for the fourth quarter and beyond is positive, and revenues for 2011 are expected to be in line with market expectations of around $763m.

ARM is also expected to dominate the mobile market for the foreseeable future. Analyst firm DisplaySearch predicted that ARM chips will be used in 300 million tablets by 2017.

In a bid to stay ahead of Intel, which is trying to crack the mobile market, ARM recently unveiled its most energy-efficient processor to date, the Cortex A7 and big.Little processing model.

The forthcoming A7 chip will be five times more efficient than the commonly used A8 and a fifth of the size. It is specifically designed for smartphones, and will enable sub-$100 handsets to have the performance level of a $500 smartphone by 2013, according to ARM.