ARM: Is diversification on the agenda?
ARM, the main developer of mobile processor technology, is not seeing any weakness in the smartphone market.
Chip suppliers have commented recently that smartphone business growth may be weakening as handset shipments show signs of slowing.
“We are not seeing this,” Peter Hutton Executive vice-president and general manager of Media Processing division at ARM told Electronics Weekly.
“At the low-end feature phones are converting to smartphones and we see big growth here,” said Hutton.
“At the top-end we see the move to (higher performance) 64-bit processors is very strong,” said Hutton.
Apple’s iPhone 5S uses a 64-bit ARM processor.
But ARM has been diversifying its “build one, sell many” processor licensing model in recent months.
Acquisitions have seen it develop first graphics, then video, display and most recently sensor capabilities.
Hutton is quick to say that ARM is not only a ‘mobile processor’ technology company.
“More than half our revenues come from non-mobile markets,” said Hutton.
Other markets include industrial microcontrollers, automotive, and the very high end server market.
“The server market is not big for us right now, but there is a lot of licensing, ” said Hutton.
Hutton said it is “not unreasonable” to expect significant server revenues in 12 months.
The main growth opportunity outside of smartphones seems to be the so-called Internet of Things (IoT) which includes smart homes, wearable electronics and tagging technologies.
“There is more we can do in this market,” said Hutton, who sees a big opportunity in offering “local processing” to offset the huge amounts of data IoT systems will inevitably generate.
And ARM is not averse to acquiring technologies, perhaps RF or power management, it may need to grow these non-smartphone markets.
“There is no point in going into a market and adding components, we need to get a synergy out of it,” said Hutton.
“And if we could find something else (to integrate with the processor) then we would consider it,” said Hutton.
The Cambridge-based processor company had Q3 revenues of £184m, 27 % up on the same quarter a year ago.
ARM’s revenues from licensing jumped more than 50% in the year.
“In the third quarter of 2013 we saw strong demand for our processor technology with a record 48 licenses signed by 24 companies, 11 of whom were licensing ARM technology for the first time,” said Simon Segars, ARM CEO.
ARM predicted another strong quarter for licensing revenue in Q4.
“Assuming the macroeconomic situation does not deteriorate significantly in the remainder of the quarter, we expect group dollar revenues for the fourth quarter to be in-line with current market expectations of approximately $290m,” said ARM