ARM Holdings, the UK chip designer, saw revenues increase by over a quarter year-on-year during three months endinf 31 March 2011. Sales rose 29% to reach £116 million, while profit before tax rose 35% to £51 million.
ARM earns money in a number of ways. Firstly, it licenses chip designs to device manufacturers. In the first quarter, the company signed 39 licensing agreements with manufacturers, including 10 with new customers. Chip license revenue grew 48% to £32 million.
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It also earns royalties from manufacturers when they sell chips based on ARM’s designs. These royalties grew 26% year-on-year to £55 million during the quarter, as shipments reached 1.85 billion.
The company also sells intellectual property relating to the processes that manufacturers use to build ARM-based chips. Total revenues from this business grew 15% to £15 million.
The remaining £15 million came from development systems and services.
The Cambridge-based company added 193 new employees over the year to reach a total of 1,922 staff (meaning ARM earns £26,500 in profit for each employee). Nearly 100 of the new staff were added at its UK facilities.
ARM’s success is clearly being driven by the rapid expansion in smartphone adoption, as many device makers employ its low power chip design. However, the company also said it is seeing growth in non-mobile device applications of its chips, including digital TVs and embedded systems.
