ARM's Q1 revenue jumps on mobile strength

The results from the chip architecture designer -- with sales up 26 percent to 28 percent, depending on the currency -- are a big contrast with chief rival Intel, which is being hurt by the weak PC market.

Shara Tibken
Shara Tibken Former managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
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ARM, with its big-little chip architecture, has been posting strong results. ARM Holdings
It pays to be in mobile, especially if Apple and Samsung are licensing your technology, as
evidenced by ARM Holdings' first-quarter results.

The U.K.-based chip architecture designer, whose technology powers the vast majority of smartphones and tablets, on Tuesday reported its sales jumped 26 percent to 28 percent, depending on the currency, to 170.3 million pounds, or $263.9 million. And its profit also soared, up 39 percent to 51.9 million pounds, or $79.4 million.

ARM also projected its full-year revenue would be "at least in line with current market expectations." Analysts pegged 2013 sales at $1.06 billion, according to Yahoo Finance.

The results contrast pretty sharply with those of ARM's chief rival, Intel. Intel last week managed to eke out quarterly results and guidance largely in line with expectations, but the financials still showed the impact of the dismal PC industry. Its net income dropped 25 percent and revenue slid 2.5 percent, and worries remain about the future of the traditional computing market.

ARM, meanwhile, largely dominates the smartphone and tablet market, and it's expanding into Intel strongholds such as servers. ARM-based chips traditionally have been more power efficient than x86-based chips from Intel and Advanced Micro Devices, which makes them well-suited for mobile devices, as well as other items such as televisions, refrigerators, and even data-center products. Unlike Intel, ARM doesn't actually build any chips but licenses its technology to companies such as Qualcomm, Nvidia, Apple, and Samsung.

Chief Executive Warren East, who will be stepping down from his role in July,noted that first-quarter growth was driven by "robust" licensing and record royalty revenue, which jumped about 32 percent from the previous year.

"ARM's royalty revenues again outpaced the wider semiconductor industry," East said in a press release. "This outperformance has been driven by market share gains in key end markets including digital TVs and microcontrollers. In addition, the growth in smartphones and tablets continues to benefit ARM."

ARM's customers shipped 2.6 billion chips in the first quarter, up 35 percent from the previous year. Mobile chip shipments jumped 25 percent, while embedded processors grew 50 percent.

The financial results from ARM reflect shipments from the previous quarter, so its first-quarter revenue is based on chips shipped in the last three months of 2012. That means it's not the best indicator for current performance of mobile devices, but its results do reflect the strength seen by handset vendors during the holiday season.