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ARM Bucks Weak Semiconductor Market Trend in Q2

ARM showed strong growth in an otherwise weak semiconductor market, with robust demand for smartphone and tablet processors driving profit and revenue growth in the second quarter, the company said on Wednesday.

The company's processors are used in devices like Apple's iPad and iPhone and Samsung's Galaxy smartphones and tablets, and ARM said it is set for strong growth in the coming quarter. The company reported strong growth even as chip makers such as Intel, Advanced Micro Devices, Qualcomm and Texas Instruments predicted a gloomy outlook for the coming year.

ARM reported profit of £54.8 million (US$85 million) before taxes for the second quarter, compared to £33.8 million in the second quarter of 2011. The estimated tax rate for fiscal 2012 is 25 percent.

It said revenue for the quarter was $213 million, up by 12 percent year-over-year.

ARM's rival Intel last week warned that it expected lower-than-anticipated growth in 2012 on account of weak consumer spending in Western Europe and North America. Qualcomm last week reduced chip shipment growth estimates for the remaining year, while AMD, which last week reported a year-over-year revenue decline, said softer consumer spending and lower demand for processors in China and Europe contributed to the company's revenue decline.

The Cambridge, UK company is benefiting from growing demand for tablets and smartphones, a market in which Intel has virtually no presence. It added 23 more licensees during the quarter, the company said in a statement.

The company also had some major design wins in the quarter. Microsoft said it would make an ARM-based tablet with the Windows RT operating system, and Advanced Micro Devices used an ARM Cortex-A5 processor inside its x86 chip for security processing.

In the quarter, ARM shipped approximately 2 billion processors, and is also finding new opportunities in microcontroller and server markets, with Dell testing ARM processors in a prototype server. The processor company last year expanded a pact with Taiwan Semiconductor Manufacturing Co. (TSMC) to make 64-bit chips.

ARM said it expects a strong third quarter as it is entering the second half of 2012 with a record order backlog. However the company could not predict fourth quarter revenue because of uncertainty about macroeconomic conditions. The company expects revenues for the whole of 2012 to be in line with expectations.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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