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LONDON, July 22 (Reuters) - ARM Holdings, the British company whose processor designs power Apple's and Samsung's smartphones, posted a 9 percent rise in second-quarter profit, helped by strong demand to license its technology.
"Market data indicates improving semiconductor industry conditions, leading to the expectation of an acceleration in royalty revenue growth in the second half of 2014," the company said.
The Cambridge-based company, which receives revenue for selling its blueprints and royalties on every chip shipped by partners, reported pretax profit of 94.2 million pounds ($161 million) on revenue also up 9 percent to 187.1 million pounds.
Nearly all of the company's revenue growth measured in dollars came from an increase in processor licensing, up 42 percent, while royalties from processors shipped in the products grew by just 2 percent.
Samsung, the market leader in smartphones, said earlier this month that its second quarter earnings would be hit by factors including slower global smartphone growth and a build up of unsold products in Europe.
The smartphone market, however, is expected to receive a boost in the third quarter when Apple is widely tipped to release the successor to the iPhone 5.
ARM's Chief Executive Simon Segars said royalty revenue in the second quarter was impacted by seasonal trends and inventory management in parts of the electronics supply chain.
But he added that an improving market environment in the second half would improve royalty revenue growth, keeping the group on track to meet analyst forecasts for the year.
Analysts had expected pretax profit of 90.9 million pounds and revenue of 182.5 million pounds ($312 million), according to a weighted consensus compiled by Thomson Reuters. ($1 = 0.5855 British Pounds)
(Reporting by Paul Sandle; editing by Kate Holton)