British chip designer ARM has posted a better-than-expected 22 per cent rise in profits for Q3, the company has announced in its latest financial report.

The Cambridge-based firm, which along with designing processors for the iPhone and Samsung smartphones is providing chips for Microsoft's Surface tablet, posted pre-tax profits of £68.1m on increased revenue of £144.6m.

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The rise in revenue from £120.2m this time last year comes after ARM has expanded operations into producing chips for new items including televisions, hearing aids and car braking systems.

The quarter saw the shipment of 2.2 billion chips "split equally between mobile and non-mobile segments", while processor royalties grew 27 per cent year-on-year. The company says it is going into Q4 with a "record order backlog and a robust opportunity pipeline," and is therefore expecting another strong quarter.

"ARM's royalty revenues outpaced the industry with continued market share gains in key end markets including digital TVs and microcontrollers," said ARM CEO Warren East.

"The increasing penetration of Cortex-A class technology and adoption of Mali graphics in consumer electronics also helped increase ARM's overall royalty revenue per chip. This strong growth in licensing and royalty revenue allows ARM to keep investing for the future and deliver increased profits and cash generation," he added.

It marks a contrast to comments East made last month when he warned that there may be trouble ahead. However, there has indeed been trouble for rival chip producer AMD, which earlier this month announced revenue losses and job cuts.