Chip shortage lifts sales at Arm as it waits for takeover approval

THE global chip drought has boosted sales at Arm as the semiconductor designer awaits the results of a Government investigation into its takeover by US giant Nvidia.

The Cambridge company, which creates designs for microprocessors used in billions of smartphones, reported sales growth of 60pc in the three months to June 30 compared with the previous year to 74.2bn yen (£485m).

Arm’s profits improved to £57.3m against a loss of £42m it recorded in the same period last year, it revealed in results for parent company Softbank.

The brightening outlook came amid a boom in chip demand as carmakers and consumer electronics companies grapple with a dearth of silicon chips.

It was the first profitable quarter for Arm since March 2017, excluding a oneoff disposal that boosted the bottom line. Arm said its investments in R&D had led to losses over the previous four years.

Chip makers have been forced to ramp up their production as a boost in demand for PCS and phones amid the homeworking boom and a better-thanexpected economic recovery accelerated demand for processor parts.

The demand lifted sales at Arm, which claims royalties on chips and licencing revenues from customers.

Arm’s profits had fallen under a strategy of investing in internet of things (IOT) technology under Softbank, which bought the company in 2016.

In September 2020 Arm was sold by Softbank to US graphics chip designer Nvidia in a $40bn (£29bn) deal. The transaction has prompted fears the deal could harm Arm’s independence and prompted a UK competition investigation.

Oliver Dowden, the Culture Secretary, has also called in the deal over national security concerns, with Arm viewed as a strategically important company in the global semiconductor supply chain. He is considering a report from the Competition and Markets Authority and is expected to decide soon whether to block the deal.

Simon Segars, Arm’s chief executive, has said that the takeover is necessary to secure the “unprecedented” investment in artificial intelligence. Without a takeover, Nvidia has argued Arm will fall into decline.

However, Arm’s return to profitability may be taken as proof the company can stand on its own.

Arm is spinning out its IOT divisions cultivated under Softbank, but they have not been bought by Nvidia. Earlier this month, it carved out one such business, Treasure Data, which will remain under Softbank control.