More chip gloom raises ARM still further

The performance of UK chip maker, ARM Holdings, was given extra gloss yesterday when two of its largest rivals delivered more bad news.

Texas Instruments, the world's largest maker of microprocessors, said that despite beating analyst expectations for its second quarter business was still heading downwards and was some way off hitting rock bottom.

CEO Tom Engibous described market conditions as "severe". Revenues are forecast to decline a further 10 to 15 per cent.

Meanwhile Europe's second largest chip firm, Infineon of Germany, recorded heavy losses of E371m (£227m) and sales down 30 per cent. Both companies - which provide processors for a variety of communications and networking equipment - blamed large customer inventories and lowering demand.

By contrast, Cambridge-based ARM saw profits rise 46 per cent on the equivalent quarter last year, with revenues up 56 per cent. Profit of £12.2m on revenue of £36m beat expectations.

ARM CEO Robin Saxby said a decline in revenues from chip shipments had been more than offset by increased sales from licensing and consulting services. ARM also said its business model enabled it to predict future revenues with more confidence than many other firms, giving it a positive outlook for the rest of the year.

STMicroelectronis of France, which is Europe's number one, was also more optimistic saying it expected an upturn in the fourth quarter.