* Q4 revenue up 14 pct, profit up 17 pct, ahead of forecasts
* Says 2016 revenue will be "broadly in line" with consensus
* Says not overly worried about China (Adds further reaction, updates shares)
By Paul Sandle
LONDON, Feb 10 (Reuters) - Britain's ARM Holdings said more than half of all smartphones sold in the latestquarter contained its most powerful processor technology,helping it grow revenue even as demand cools in markets such asChina.
The company's v8 architecture, which analysts say commands30 percent higher royalties than its forerunner, has filtereddown from devices like Apple's iPhone at the beginningof 2015 to become the industry standard.
Strong growth in royalty payments, made on each of the 4billion ARM-based chips shipped in the prior quarter, was behinda 14 percent rise in revenue in the fourth quarter, said ChiefFinancial Officer Chris Kennedy.
"Chips based on our latest version 8 technology willcontinue to replace older ARM technology in mobile markets, andgain share in networking infrastructure and servers," he said.
"It will end up in every phone, even down in the low end."
More of the Cambridge-based company's technology is beingused by smartphones makers like Samsung forprocessing and functions like graphics, enabling it to capturemore of the value of each device sold.
SPREADING THE RISK
Worries about the strength of demand in China, recently thefastest growing market for technology, is casting a shadow overthe industry.
Apple, the source of about 5 percent of ARM's revenueaccording to analysts, forecast its first revenue drop in 13years last month on signs of weakness in the Chinese market.
Apple suppliers like Imagination Tech in graphicsand Japan Display Inc have been hit by slowing sales ofiPhones, but ARM said the growing demand for its technologyacross different sectors meant it was not overly reliant on onecustomer or one market.
"Clearly China is an issue for businesses globally," Kennedysaid. "For ARM, given our diversification, it's something wefocus on but it's not something we are overly worried about."
Analysts, however, noted caution in ARM's outlook. Thecompany said that based on current market conditions revenuesfor 2016 would be "broadly in line" with expectations, whichstand at about $1.64 billion.
ARM's shares were trading down 2 percent at 921 pence at1235 GMT, after falling as much as 6 percent earlier, asanalysts at Liberum said adjusted earnings just missedforecasts, once a one-off royalty catch-up payment was excluded.
They also flagged the outlook."ARM does not typically usethe word 'broadly'," they said.
ARM won 51 processor licensing deals in the quarter,including 11 for its latest designs, mainly for use insmartphones and cars. "The computing power on a car is going toup 100 times over the next five years," Kennedy said.
(Editing by Keith Weir)
