10-22-13 3:45 AM EDT | Email Article

LONDON--British microchip designer ARM Holdings PLC (ARM.LN) said Tuesday it has a record order backlog going into the final fiscal quarter as it posted a rise in third-quarter profit on forecast-beating revenue powered by global demand for smartphones.

Net profit for the three months to Sept. 30 increased to 48.5 million pounds ($78.4 million) from GBP41.3 million a year earlier. Profit before tax and exceptional items, a closely watched metric, increased 36% to GBP92.6 million.

Revenue rose 27% on the year to GBP184 million, compared with market forecasts of GBP173.3 million. Revenue in dollar terms increased 26% and the company forecasts dollar revenues in the fourth quarter in line with market expectations of about $290 million.

In the third quarter, 2.5 billion ARM-based chips were shipped, it said.

The Cambridge-based group licenses its patented designs to chip makers, who then adapt them by adding their in-house technology. ARM, whose chip technology is found in Apple Inc.'s (AAPL) iPhone and Samsung Electronics Co. Ltd.'s (005930.SE) Chromebook laptop, receives an upfront fee to license the design and a royalty on every chip shipped.

ARM's specialization in designing low-cost, low-energy chips is driving its profit, boosted by the popularity of smartphones and tablet computers run on small, efficient batteries.

ARM shares closed at 1039 pence Monday, valuing the company at GBP14.54 billion. The stock has risen 35% this year.

Write to Simon Zekaria at simon.zekaria@wsj.com

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(END) Dow Jones Newswires

October 22, 2013 03:45 ET (07:45 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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