When you think of computer chips, you probably think of Intel. Indeed our Operations Insight 12.2 (pages 321-322) is about this company. But right now, a British company -Arm Holdings – is growing faster the brand leader. Arm provide the computer chip technology in Apple’s iPhone and iPad. It recently has reported a 23% increase in second-quarter profits, up to £66.5m, with sales of £135m for the three months to the end of June. This sales level represents 2 billion semiconductors, which according to our calculations means that each chip costs less than 7 pence.
Arm licenses its technology to chip makers and receives royalty income on its intellectual property. The company’s good performance was for two reasons – production volume was 9% up (compared to an industry-wide fall of 4%), while processor royalties grew 14%. But to put this in context, Arm’s annual sales will be around £600 million, whereas Intel’s sales last year were $54 billion.