Apple’s iPad and iPhone have transformed the fortunes of chip designer, ARM, but the company is keeping quiet on the extent and significance of Apple’s business on its overall profit explosion.
Ask anyone involved in Apple’s mobile device supply chain how their business is performing and they’ll smile broadly. Ask any of them just how much of a contribution their AAPL business makes, and the smile will weaken and your source will clam-up.
Apple’s partners know that if they want to keep on sucking on the Cupertino money machine they need to keep the details quiet. So ARM’s news of a record-breaking quarter this morning is no surprise — though details are scant on the iDevice front — as we also know AAPL is prepping for a huge rise in sales this year.
ARM’s fourth- quarter profit climbed 72 percent on increased shipments of chips used in tablet computers. Net income hit £29.7 million, up from £17.3 million one year ago. Sales were up 34 percent. The company is now aiming to get its chips into mobile devices, including smartphones and tablets, and a new target: servers.
“ARM continues to sign licenses with influential market leaders in an increasingly digital world, and as the industry chooses ARM technology in a broadening range of electronic products, it further drives our long-term royalty opportunity. The growth in licensing and royalty revenues, throughout 2010, has combined to deliver our highest ever annual revenues, profits and cash generation,” said company CEO, Warren East.
Even those vapor tablets introduced at CES may help ARM”s margins. “Most tablets that we can see coming forward are ARM-based,” CFO Tim Score said today on a conference call with reporters.
35 processor licenses signed for a range of applications including smartphones, mobile computers, servers and smartcards. 8 of the licenses were for ARM’s advanced Mali graphics processors for use in smartphones, mobile computers and digital TVs. 19 of the licenses were for ARM’s Cortex processors, including 8 new licenses where ARM technology is being used by a new customer or in a new product line within an existing customer. One of these licenses is likely to be for the future Apple mobile chip.
Some Q4 stats (taken from company release):
- Microsoft announced that future generations of Windows operating system will support ARM-based chips
- NVIDIA licensed both Cortex™-A15 and the next-generation ARM architecture for computing markets
- Strong licensing drives a 35% sequential increase in order backlog
Growth in mobile applications
- 1.1 billion ARM-processor based chips shipped into mobile devices
Growth beyond mobile into consumer electronics and embedded products
- 0.7 billion ARM-processor based chips shipped into everything from smart-meters to solid-state drives
- Growth in outsourcing of new technology
- Physical IP: Freescale became ARM’s first subscription licensee for physical IP at an advanced technology node; and a foundry licensed a royalty-bearing platform of physical IP.
- Graphics: 8 licenses for Mali™, ARM’s advanced graphics processor