Warning as ARM beats forecast

ARM Holdings, the mobile phones chip designer, warned today that the semiconductor industry remained challenging as it reported second-quarter sales and profits above analysts' expectations.

Chief executive Warren East warned that royalty income in the second half would be dented with lower numbers of mobile phone sales in Asia on the back of the regional Sars epidemic. The shares fell 4 1/2p to 73 1/4p in early trading.

Pre-tax profits for the company founded by Sir Robin Saxby for the three months to 30 June were up 8% over the first quarter to £6.6m on revenues of £31.4m, up from £31m the previous quarter. Second-quarter royalty revenues maintained their firstquarter levels with £10.2m from 180m units shipped.