Profits drop at chip designer Arm

Times are hard for microchip makers

The UK's leading chip designer saw profits fall last year as the slump in the technology market finally caught up with the company.

We expect the exact timing and signing of license deals to continue to be hard to predict

Warren East, Arm chief executive

Arm Holdings said profits fell 6% to £47.4m ($77.3m), although if a £2m restructuring charge is taken into account, then profits fell by 10%.

The company cut its workforce by 12% over the year, taking the number of staff to 721, and making a saving of £5m.

Arm was a member of the FTSE 100 index of leading companies until last June when it was demoted because of its falling share price.

Market recovery

The company said that at first it had managed to ride the severe downturn in the semiconductor industry.

But when a predicted upturn in the industry did not materialise it was hit by the slowdown.

And it warned that in the short term its profits would remain flat.

The chief executive, Warren East, warned: "We expect the exact timing and signing of license deals to continue to be hard to predict."

But he said that as and when the market recovered Arm would be able to increase its spending on research and development.