ARM Keeps Riding the Mobile Chip Wave

ARM Holdings (NASDAQ: ARMH  ) just posted impressive top-line gains as computing continues its mobile shift. The British chip designer, whose architecture designs are ubiquitous in mobile devices, generated $263.9 million in revenue in the first quarter, up 26% year-over-year. The net result was a bottom line adjusted profit of $0.24 per share. Both headline figures topped consensus estimates.

Outgoing CEO Warren East, who announced his retirement last month effective July, said there's been "strong uptake" of ARM's next-generation processors as well as its Mali graphics designs. The company's big.LITTLE technology is also starting to appear in devices, and those chips carry a higher number of royalty-bearing cores.

The most prominent device currently using big.LITTLE is Samsung's Galaxy S4, which includes Samsung's Exynos Octa in some international variants. Other versions of the South Korean company's Galaxy S4 are powered by Qualcomm Snapdragons, which are also based on ARM instruction sets.

ARM's growth has been primarily driven by increased chip shipments using its technology. There were 2.6 billion ARM-based chips shipped in the first quarter, a year-over-year gain of 35%. The average royalty per chip hasn't changed much over the past year, fluctuating between 4.8 cents and 4.9 cents. ARM's Mali graphics designs saw shipments increase by more than five times, signaling continued penetration.

Earlier this month, ARM and Taiwan Semiconductor (NYSE: TSM  ) also announced the first "tape-out" of Cortex-A57 processors using TSMC's FinFET process, signaling that the new chips are ready for mass production. ARM inked 22 processor licenses in the first quarter, which includes seven of these newest Cortex-A50 series processors like the Cortex-A57. That brings the company's total Cortex-A50 series licenses to 16.

ARM has also begun to ink licenses for the next wave of computing that may shift to digital TVs and wearable technology. I had thought that ARM may have gotten ahead of itself due to its valuation, but the company is proving me wrong.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2380713, ~/Articles/ArticleHandler.aspx, 4/19/2014 11:16:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement