ARM Gets Boost From Smartphones While PCs Hurt Intel, AMD

ARM’s strong first quarter, bolstered by mobile devices, is a stark contrast to Intel’s and AMD’s struggle with a faltering PC market.

As chip makers Intel and Advanced Micro Devices continue to see their bottom lines impacted by the decline of PC sales worldwide, ARM Holdings is seeing its financial numbers rise, thanks in large part to the growing popularity of such devices as smartphones and tablets.

Officials from both Intel and AMD earlier this month announced first-quarter earnings that saw both revenues and income fall as the company try to expand into new growth areas and reduce their dependence on the PC market. Global PC sales continue to slow as consumers and business users turn their focus and tech dollars to mobile devices.

It’s those devices and others that continue to give a boost to ARM, whose chip designs are found in the bulk of smartphones and tablets on the market today. At the same time, ARM-based chips can be found in such connected devices as smart TVs and sensors. The company—which designs low-power chips and licenses those designs to companies such as Qualcomm, Samsung and Texas Instruments—saw first-quarter profits jump 44 percent, to $136.3 million, and revenues grow 28 percent, to $263.9 million.

Company officials said 2.6 billion ARM-based chips shipped during the quarter, a 35 percent increase over the same period in 2012.

“As consumer electronic and embedded devices are increasingly becoming smarter and more connected, we’re seeing our customers choosing ARM’s technology for high performance and low-power, and their demand is driving both our licensing and our royalty revenues,” Warren East, ARM’s outgoing CEO, said during an April 23 conference call with analysts and journalists to discuss the first-quarter numbers.

In all, ARM announced 22 processors licenses signed during the first quarter for use in such devices as smartphones, digital TVs and wearable technology, and half the licenses were for the company’s Cortex-A Series technology. The company also signed three licenses for its Mali graphics technology. As of the first quarter, ARM has signed a total of 133 Cortex-A licenses, 75 Mali licenses and 17 licenses for its big.Little architecture, which is designed to balance users' seemingly conflicting demands for greater performance and longer battery life with lower power consumption.

Both Intel and AMD are continuing to drive down the power consumption in their x86-based processors as they look to gain inroads into such areas as tablets and—for Intel—smartphones. They also see embedded devices as a prime growth area. Intel is due to release its next-generation Core chip—dubbed “Haswell”—in June, a 22-nanometer system-on-a-chip (SoC) that will offer greater energy efficiency and graphics capabilities and that will be aimed at notebooks, tablets and hybrid systems. In addition, the company later this year will release its Atom quad-core “Bay Trail” chips for tablets and “Merrifield” for smartphones.

However, for both chip makers, PC chips still account for much of their revenues, something each is trying to correct, and for good reason. Gartner and IDC analysts earlier in April said PC sales globally continue to slow, an indication of a shift in the overall computing market.

"Consumers are migrating content consumption from PCs to other connected devices, such as tablets and smartphones,” Mikako Kitagawa, principal analyst at Gartner, said in an April 10 statement. “Even emerging markets, where PC penetration is low, are not expected to be a strong growth area for PC vendors.”