ARM Hails Internet Of Things As Profits Leap

ARM Holdings has reported a 33% leap in pre-tax profit, partly due to surging sales of the latest iPhone models.

The chip designer, which licences its products to the likes of Apple and Samsung, said that first quarter sales rose by 14%, royalties from processor designs jumped 31% but licensing revenue grew at the much slower rate of 3%.

Profit before tax hit £103.4m while group revenues were £227.5m.

Unlike its main rival Intel, ARM does not make chips, rather it designs and licenses them to third parties.

It describes itself as the world's leading semiconductor intellectual property supplier.

ARM chips sit inside no less than 95% of all smartphones and sales of new products from Apple were a major contributing factor to ARM's performance in the quarter.

ARM technology will also sit inside the new Apple watch which is released on Friday.

Looking forward, the company said that processors for microcontrollers and smart sensors to support the so-called Internet of Things would help underpin future revenue growth.

The Internet of Things, which has been described as technology which will help create a new industrial revolution, involves connecting devices including everyday home objects such as fridges, as well equipment and components used in industry and healthcare.

According to Cisco projections, by 2020 there will more than 50 billion devices connected to the Internet of Things.

Simon Segars, ARM's chief executive, said: "In Q1 (first quarter) we licensed ARMv8‑A processors for networking and server applications and Cortex-M processors for microcontrollers and smart sensors for the Internet of Things.

"These design wins underpin future royalty revenue growth and enable continued investment in future innovative technology to create long-term superior returns for our shareholders."

Shares in ARM rose 6% in early trading on the FTSE 100 on Tuesday.