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Worries subside as chip designer ARM predicts boost in smartphone sales

Although ARM sales were disappointing at the end of last year, the chip designer expects smartphone sales to be boosted in the second half of 2014.

Samsung Semiconductor

ARM Holdings, the company behind the vast majority of chips found in today's mobile devices, experienced slumping financial performance at the end of 2013, prompting some to wonder if the high-end smartphone market was softening. But now, it appears everything is just fine.

Speaking to Reuters in an interview published Wednesday, ARM's Chief Financial Officer Tim Score said his company has witnessed a boost in smartphone demand across the board. During the second half of 2014, ARM expects demand and sales to pick up considerably.

The British company announced its first-quarter earnings (PDF) on Wednesday. ARM reported $305 million in revenue, jumping 16 percent compared to the same period last year. Profits before tax were up 9 percent year over year to £97.1 million ($163.36 million). The company also announced that 2.9 billion ARM-based chips were shipped, up 11 percent year over year.

The issues ARM experienced during the fourth quarter of 2013 had much to do with inventory correction, the company reported. Companies had anticipated stronger demand for their products and had a stockpile of components on the ready to meet that demand. Although the demand slipped for high-end mobile devices, ARM sees that changing in a big way starting next quarter.

Much of the demand for higher-end smartphones is impacted by the devices surrounding that marketplace. Samsung and HTC are offering some of the higher-end Android smartphones, and they only started shipping recently. Apple, meanwhile, hasn't announced its own mobile updates just yet, but the company is expected to announce a 4.7-inch iPhone 6 and a phablet boasting a 5.5-inch screen. Assuming those devices run on ARM architecture, the company should see increased demand later this year.

CNET has contacted ARM for more details on mobile demand. We will update this story when we have more information.