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ARM says acquisition would be misguided
SAN FRANCISCO |
SAN FRANCISCO (Reuters) - Speculation ARM Holdings Plc (ARM.L)(ARMH.O) could become a takeover target is misguided and ignores the importance of the chip designer staying independent, ARM's president said.
ARM's architecture has become ubiquitous in the mobile market, where it licenses its technology to chip makers, but does not build chips of its own, keeping it away from direct competition with its customers.
"All of our first-line customers are competitors with each other and we manage this sort of unholy alliance ... and we manage that through being independent and equal to them all," Tudor Brown told Reuters in an interview on Tuesday.
ARM, whose customers include Infineon Technologies AG (IFXGn.DE), Samsung Electronics Co Ltd (005930.KS), Texas Instruments Inc TXN.N and Qualcomm Inc (QCOM.O), beat expectations with a 47 percent rise in fourth-quarter profit on Tuesday and said it is well placed for 2011.
Its shares have surged 180 percent in the past 12 months, and are now priced equal to around 51 times earnings, setting a high bar for its outlook.
The company's stock on Nasdaq closed 8.35 percent higher at $27.13. For and Insider TV interview with Tudor Brown: link.reuters.com/hys77r
The power-efficiency of its chip designs has helped ARM dominate the mobile industry, where battery life is a major concern for tablet and phone manufacturers.
ARM's success in mobile computing, where many manufacturers see it as an industry standard, was endorsed last month by Microsoft Corp (MSFT.O) with its decision to make future versions of its Windows operating system compatible with ARM architecture.
Brown, who helped found the company, said part of ARM's attraction to its customers -- and part of the reason they consider it an industry standard -- is its independence, an asset that could be lost if it was acquired.
"There are a lot of powerful people out there, a lot of big companies -- the Qualcomms, the Samsungs, the TI's, the Nvidias, the Motorolas MMI.N ... If any one of those companies made a play you can imagine the other ones creating quite a sort of rear-guard action."
Chip giant Intel Corp (INTC.O) has fallen far behind in the mobile race, where its processors so far are seen as powerful but too power hungry. But it is launching new chips this year that is says are more efficient.
Brown said ARM's new Mali graphics architecture would likely become a major product for the company as customers begin to use it alongside ARM-based application processors.
"We're just starting to see prototype volumes, low volumes of Mali-based products in the market. I would hope by the end of this year we'll see serious volume of Mali based products," he said.
That market is currently led by Imagination Technologies Group Plc (IMG.L), in which both Apple Inc (AAPL.O) and Intel hold a stake.
In January, Nvidia Corps's (NVDA.O) new Tegra 2 chips, based on ARM's technology, appeared in several new tablets and smartphones running Google Inc's (GOOG.O) Android operating system, helping the Santa Clara, Calif-based company's stock soar more than 50 percent in the month.
Nvidia also said in January it was designing ARM-based processors for PCs, challenging Intel in its traditional market.
Brown said the growing amount of electricity used running computers that provide content over the Internet is beginning to make energy-frugal ARM architecture compelling for servers.
(Reporting by Noel Randewich; editing by Andre Grenon)
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