Apple’s use of next generation processors in its new iPhone 5S helped microchip designer ARM beat profit expectations in the third quarter, but shares fell amid fears of a slowdown in smartphone sales.
FTSE-listed ARM, whose chip designs power more than 95% of smartphones and most tablets, posted a profit of £92.6 million, up 36% on a year ago, on revenue 27% higher at £184 million.
The Cambridge-based company signed up 11 new clients in the three month period and was boosted by Apple’s decision to use a 64-bit processor in its new iPhone 5S, a more advanced design that carries a higher royalty fee.
ARM’s chief finance officer Tim Score said: “Mobile is moving in the direction of 64-bit and Apple’s recent announcement probably accelerated that. The long term trend is towards 64-bit.
But investors were disheartened by lower than expected royalty revenues, the fees paid every time a device containing an ARM designed chip is shipped.
Last night US chipmaker Texas Industries reported customers cutting orders, fueling fears of a slowdown in smartphone sales, and ARM shares dipped in early trading.
Score dismissed fears, saying the market was “still very strong” and said the firm had a record backlog of orders.
Score also said that the trend towards the so-called ‘internet of things’, whereby everything from watches to fridges are connected to the internet, was a “volume opportunity” that would be increasingly profitable for the company.
Score said he expected the firm to be in line with fourth quarter expectations.
