ARM shares hit highs as it eyes server market-UPDATE 2

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Thursday September 09, 2010 06:08:15 AM GMT

* New Cortex processor will address server market

* Licensed by Texas Instruments, Samsung and ST-Ericsson

* ARM shares at new 8-year high

(Adds company comments; updates shares)

By Paul Sandle

LONDON, Sept 9 (Reuters) - British chip designer ARM Holdings unveiled a new processor that could help it extend its dominance in mobile phones into new markets, sending its shares to a new eight-year high on Thursday.

ARM is fast making inroads into bigger rival Intel's territory with design wins including Apple's iPad tablet computer, driving its shares to more than double in price this year so far.

Texas Instruments, Samsung and ST-Ericsson are the first licensees for the new A15 processor, codenamed "Eagle" and part of ARM's Cortex family.

ARM said it would deliver performance five times better than today's advanced smartphone processors, and could be used in servers and wireless networking as well as phones.

ARM's superior power management has been a key advantage in the battle with far-bigger Intel, which dominates the PC and server markets, as computing becomes more mobile and devices are separated from power sources.

"We are being very successful with our intense focus on low power," ARM's marketing chief Ian Drew told Reuters in a telephone interview.

"What Cortex A15 allows us to do is expand even further into the infrastructure, and some of the features built in the processor will help go into the networking and the server market as well."

The A15 will support functions such as 3D navigation, augmented reality -- where data is superimposed on real images -- and high-speed broadband.

Sample chips are expected next year and then first products featuring A15-based processors will ship in 2013, Drew said.

Analyst Nick James at Panmure Gordon said it was a strong opportunity for ARM to widen its addressable markets, after the group penetrated the mobile computing market with its success in Apple's iPad.

"This gives them opportunities in wireless infrastructure, enterprise networking and servers," he said.

However, he said success was not guaranteed, and he left his estimates unchanged at this stage.

Shares in ARM rose to an eight-year high for a second consecutive day, reaching 416.4 pence before paring gains to trade at 398.6 pence by 1441 GMT, up 2.8 percent on the day.

The stock was boosted on Wednesday by news that Samsung had likely selected the firm's technology for its new mobile phone chip.

ARM-based chips are in more than 95 percent of the world's mobile phones and it is increasingly competing with Intel in netbooks and tablet computers.

Apple's A4 chip, which is in its iPhone 4 and iPad tablet computer, is based on ARM's Cortex-A8 core.

In addition, chipmakers including Samsung, Toshiba, and Nvidia license ARM's architecture and then pay a royalty, averaging about 10 cents, on each chip shipped. (Additional reporting by Georgina Prodhan; Editing by Andrew Callus

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