ARM Rides Smartphones, Tablet Chip Shipments to Beat Q1 Estimates

British processor designer ARM, best known for chip designs used by Apple (NASDAQ: AAPL) in its mobile devices and licensing to manufacturers such as Qualcomm (NASDAQ: QCOM), rode the boom in smartphones and tablets in its Q1 2013 to a 28 percent jump in revenue and a 44 percent spike in earnings.

In the larger view, ARM’s gratifying Q1 results reflect the tectonic IT industry shift away from PCs and toward mobile devices, a movement threatening nearly every major desktop and notebook manufacturer and prompting them to seek wider horizons offered by smartphones and tablets. ARM is one of the major beneficiaries of this era’s miniaturization wave.

“We’ve made an encouraging start to 2013 with more leading companies deploying our technology in their products,” said Tim Score, ARM chief financial officer, on a conference call. He forecasted ARM’s sales increase this year will beat projected industry growth, keeping it in line with analyst expectations. "We benefited from the growth of smartphones, tablets and smart TVs, as well as our customers gaining market share in embedded products, such as chips going into cars, industrial automation and consumer white goods," he said.

For its Q1 2013—which, by the way, reflect ARM transactions for the last three months of 2012 and not the first three months of 2013—sales jumped 28 percent to 170.3 million pounds or $260 million, beating analysts’ estimates of 160 million pounds, according to Bloomberg. Pretax earnings rose 44 percent to 89.4 million pounds or $136.3 million, some 15 percent better than expectations.

During the period, the company recorded a 25 percent uptick in shipments of mobile chips and a 50 percent spike in embedded chip sales year-over-year. It shipped a total of 2.6 billion ARM-based chips in Q1 for a 35 percent gain. In particular, ARM called out the 22 processor licenses it signed not only for smartphones and other mobile devices but also for digital TVs and wearable technology.

“Everyday devices are becoming smarter, more connected and more energy-efficient, which is increasing the applicability of and demand for ARM’s technology,” said Warren East, ARM chief executive, in a statement.

Bloomberg reported that Simon Segars, who is set to replace the retiring East in July after the latter's 12 years at ARM’s helm, will focus on upping the presence of the company’s chip designs into connected devices, web-enabled televisions, tablets and smartphones.