The news prompted Arm shares to jump 170 pence to 1500 pence, nearly 13%, valuing the company at about £2.9bn. At Friday's closing price of 1330 pence, the company was valued at £2.52bn.

Arm designs high performance, low-cost reduced-instruction microprocessors. Its processors are used in mobile phones, portable PCs and TV set-top boxes.

The Arm microprocessors are expected to help Intel in the portable, hand-held and applied computing markets, the company said.

Buoyant share price

Arm is one of a handful of companies which have earned Cambridgeshire the name Silicon Fen.

The company floated on the stock exchange in April last year at a price of £5.75 per share and its share price has since been boosted by high-profile licensing deals.

Earlier this year, it announced that it was to provide the computer chips for the next generation of Nintendo Gameboy machines.

The company now has nearly 40 licensees, which account for about 50% of its revenues.