ARM Holdings sales leap after Japanese takeover agreed

ARM Holdings, the Cambridge-based technology company, has defied the market by reporting a 17pc surge in sales just one week after it agreed to a £24.3bn takeover by Japan’s Softbank.

Sales reached £267.6m in the three months to June 30, up from £228.5m the previous year, while pre-tax profits increased 5pc to £130m on an adjusted basis, beating analysts’ expectations. On a statutory basis, pre-tax profits were up 1pc to £95.9m.

ARM, which designs microchips that power the iPhone and an array of other connected devices, last week agreed a £17-per-share cash takeover deal from Softbank.

The company rewarded shareholders with an interim dividend of 3.78p a share, 20pc higher than last year.

ARM earns royalty income from microchip makers that pay to use its designs, notably Apple. It is also plough- ing resources into a growing market for connected cars and robots. The investment is part of a bet on the “internet of things” (IOT ) – the idea that everyday objects from street lamps to fridges will be connected and controlled remotely.

In May, ARM paid £238m for computer vision company Apical, a Loughborough-based designer of imaging processors, as part of its shift into IOT technology. It also partnered with Hopu investment management, a Chinese private equity firm, to launch a fund focusing on the new technology.

ARM’s core business of royalty revenues makes up half its sales. This division enjoyed a 19pc lift in sales over the three-month period despite concerns about a slowdown in smartphone sales amid fears the market has hit saturation.

ARM said 3.6 billion microchips using its designs were shipped over the quarter, an increase of 9pc.

Simon Segars, ARM’s chief executive, said the business had become “increasingly diverse” as other British companies, such as Imagination Technologies, have suffered deep losses due to a stalling smartphone market.

“Around 60pc of our chips go into non-smartphone markets, as we move into IOT,” he said.

ARM’s sale has also proved a test for Theresa May, the Prime Minister, who has pledged to put foreign takeovers under the spotlight if they are against the national interest. Softbank has promised to double ARM’s 1,600-strong UK workforce over the next five years.