LONDON (ShareCast) - Strong gains for chip designer ARM Holdings helped the tech sector higher on Friday as stocks attempted to recover following a tough week.

ARM was up 2.08% at 980.5p in afternoon trade after US software giant IBM announced that it has licensed a broad range of processors from the FTSE 100 group, which it plans to use in its communications and networking gear.

According to analysts at Credit Suisse, ARM’s traction continues to rise in the networking space and this segment could be worth $150m in royalty revenues to the company by 2017, which would represent 15% of group royalties.

The bank reiterated an ‘outperform’ rating on the stock, saying: “This opportunity in networking, combined with our view around royalties in smartphones/tablets, we believe ARM is set to see its top-line grow at 16% compound annual growth rate (CAGR) and earnings at 25% CAGR over 2012-2017.”

These comments will come as a relief to investors after a sharper-than-expected slowdown in royalty growth in the third quarter took the shine off some stellar results in licensing. Despite the rebound on Friday, the stock still stands 3.5% lower than it did last Friday.

The wider sector has also been under pressure this week after disappointing updates from a host of global chip peers, including Texas Instruments, Broadcom, Intel and STMicroelectronics.

UK-listed groups CML Microsystems, Imagination Technologies and Wolfson Microelectronics were making gains on Friday.


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Technology Hardware & Equipment 1,153.06 +1.55%
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Mobile Telecommunications 5,274.37 -0.95%

BC

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