A Brief Discussion on ARM's Decline in Sales Growth in the Chip Market in the Second Half of the Year

According to foreign media reports, the chip maker ARM CEO Warren East (WarrenEast) recently said that due to concern that chip sales growth may decline in the second half, the company suspended part of the 2012 recruitment plan.

ARM's chip design is used in many products such as the Apple iPhone. According to ARM, many of the company’s customers’ sales in the first half of the year have declined, and it is expected that sales will not increase as much as in previous years.

In general, chip sales are the highest in the third and fourth quarters of the year because many consumers choose to buy tablets and smart phones during the Christmas holidays. For example, this year, many new products will be released next month, including the Samsung GalaxyNote tablet and the Apple iPhone 5, which may stimulate the chip sales to increase significantly.

However, Easter said that most people in the industry have lower expectations for the second half of the year, because the economic uncertainty makes consumers delay the purchase of digital products.

"Many chip makers have hinted that they do not expect significant sales growth in the second half of the year," Easter said.

ARM charges a small license fee for each product it sells that contains its chip design. The company’s second-quarter results exceeded analysts’ expectations and contrasted sharply with rivals Intel and Qualcomm, both of which warned that sales might be weak in the second half of the year.

ARM, headquartered in Cambridge, England, said that due to the difficult sales situation in the second half of the year, the company suspended part of the recruitment plan for the second half of the year. ARM recruited 200 to 250 engineers each year over the past three years and began to enter the industrial fields such as servers and smart TVs. However, this year's recruitment numbers may be relatively low.

“We had hoped to recruit more staff this year, but the uncertainty of the industry climate has forced us to slow down the pace,” Easter said. “We also slightly tilted recruitment from experienced people to graduates because the cost of recruiting graduates is relatively cheap.”

However, Easter believes that in the long-term, the chip field will achieve strong growth, because the market demand for networking equipment will increase. ARM is developing a new type of microprocessor technology that can be used to make a variety of sensors that can be integrated into a wide range of devices from home appliances to medical devices.

According to Cisco's estimates, Internet traffic will quadruple in the next four years. This means that the corresponding number of devices will also increase significantly. ARM's technology is being expanded beyond mobile phones, such as computer servers running these networks.

"ARM's technology is being designed into a wide variety of infrastructure products that enable mobile phones to work properly and allow networked TVs to communicate with the Internet. We are very excited about this," he said.

"These changes will gradually appear in the coming years. They may slow down due to the economic cycle, but they are an irresistible trend."