ARM Beats Wall Street Expectations Thanks to Mobile Demand

U.K.-based chipmaker ARM reported results for the second quarter of fiscal year 2011 today. The firm has seen a tremendous amount of growth, which is expected to extend to the third quarter of this year. ARM credits its success to exploding demand in the mobile space.

The company reported a revenue increase of 28 percent to £117.8 million from £100 million last year.  The company has seen a 27 percent growth in dollar terms, the currency in which the chipmaker generates most of its income, at $190.2 million.

ARM, which competes against U.S. giant Intel, said it “enters the second half of 2011 with a healthy order backlog and a robust opportunity pipeline, which are expected to deliver strong performance in license revenues.”

Net profit also rose from £21.9 million year ago to £26.6 million, or $43.2 million, this year. In total, ARM shipped 1.1 billion chips and signed 29 licenses in the second quarter. ARM beat analysts’ estimates this quarter, but it remains cautious for Q3 – in particular, the period before the Christmas spending spree.

ARM is picking up, thanks to demand from customers including Apple, Microsoft, and several others. Intel, despite its early missteps in the mobile space, apparently does not consider ARM as true competition, and Bill Leszinske, a GM at Intel’s Atom business, went as far as saying “there is no ARM.”  Instead, he credits the company for contributing to the immense competition in the mobile processor industry from ARM-based vendors such as Qualcomm and Broadcom. The market share of these companies is what Intel, still a relatively small player in this space, is aiming at.

There is a very good reason Intel is expanding: smartphones and tablets are gradually biting off chucks of its revenue opportunities. Its investors are already showing signs of concern, and Intel is expected to report growth of only five percent next quarter, compared to the average eight percent.