By Lisa Fleisher and Rory Gallivan
LONDON--Computer chip designer ARM Holdings PLC on Wednesday
reported a rise in first-quarter profit boosted by customers using
its technology in a growing range of products from supercomputers
to sensors in smaller objects.
Net income for the first three months of the year rose to
GBP62.3 million ($104.7 million) from GBP51.9 million a year
earlier. Earnings per share were 4.4 pence, up from 3.7 pence in
the prior-year period, the company said. Revenue rose 10% to
GBP186.7 million.
The Cambridge, England-based company designs chips found in 95%
of all smartphones, which have fueled its revenue in recent years.
ARM designs processors and licenses them to chip manufacturers such
as Qualcomm Inc. and Nvidia Corp for a licensing fee and royalties
on every chip shipped.
ARM said it is seeing continuing pickup of its new 64-bit chip
design, which was first used by Apple Inc. in the iPhone 5s
announced in September. The company said five new licenses of its
ARMv8-A processors--the 64-bit chip--were signed, bringing the
total to 43. ARM also said it was hoping to generate more business
in lower-end smartphones in countries such as India.
Analysts said they expected growth in advanced smartphones to
increase and for manufacturers to adopt the 64-bit chips, although
not immediately. "That's going to take some time," said Alex Gauna,
an analyst with JMP Securities.
The market has also been expanding for lower-cost, ARM-designed
chips in everyday objects, such as cars or bikes or even
toothbrushes, and demand will grow as more companies expand into
the so-called "Internet of things," where objects are connected to
the Internet so they can be controlled remotely.
However, those chips aren't as profit-driving as the ones in
smartphones, according to Pierre Ferragu, an analyst with Sanford
C. Bernstein Ltd.
While 2.9 billion chips with ARM processors were shipped in the
first quarter, up 11% from the previous year, the average royalty
per chip was down slightly to 4.7 cents.
The company also said Wednesday that revenue reflected a $5
million deduction because a customer previously overreported
royalties.
Write to Rory Gallivan at rory.gallivan@wsj.com and Lisa
Fleisher at lisa.fleisher@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires