ARM Sees Profits Rise 45% in Q4 2011

ARM Holdings, the company whose chip designs powers a majority of the world’s mobile devices, has posted its Q4 2011 results, and they are very much in line with expectations.

ARM’s revenue grew 21% year-over-year to $217 million, with profit before tax growing 45% to $109 million. ARM grew its operating margin in Q4 2011 to a hefty 48.2%. ARM is able to maintain such high margins because it doesn’t produce chips itself, it just designs them and licenses those designs to chip manufacturers like Qualcomm, Texas Instruments etc.

While its revenues are just a rounding error compared to Intel’s, ARM is proving to be a very tough competitor. While Intel tries to break into the mobile processor market, ARM is trying to get its foot in the door when it comes to desktop processors. With Windows 8 supporting ARM processors, ARM may be able to capture a significant share of the desktop processor market in 2012.

Warren East, ARM’s CEO said:

“In Q4 and throughout 2011 ARM has seen strong licensing growth, driven by market-leading semiconductor companies increasing their commitment to ARM technology, and more new customers choosing ARM technology for the first time. We have also seen our royalty revenue continue to grow faster than industry revenues as the ARM Partnership gains share in our target markets.

2012 will bring exciting opportunities and challenges as ARM enters competitive new markets where we are well positioned to succeed with leading technology, an innovative business model and a thriving ecosystem of Partners. As our customers are designing more ARM technology into their widening product portfolios, ARM is investing in the development of new products. These products will drive further long-term growth in our revenues, profits and cash.”

ARM’s chips are now used not only in mobile devices, but also other consumer electronics technology like digital TVs and embedded devices.

Around 1.2 billion chips for smartphones and mobile devices and 1 billion chips for embedded digital devices were shipped in Q4, implying 10% and 40% growth respectively.

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