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ARM Rises in London on Microsoft Windows System Deal

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Jan. 6 (Bloomberg) -- ARM Holdings Plc climbed to its highest price in ten years in London trading after Microsoft Corp. said the next version of its Windows operating system will run on ARM’s chip designs for the first time.

ARM, which designs semiconductors that power Apple Inc.’s iPhone, rose 2.3 percent to 482 pence, the highest level since Feb. 2001. Microsoft said yesterday it will work with ARM-based chips, as it aims to produce an operating system running on smaller, thinner devices with longer battery life and catch up with Apple in the tablet computer market.

“Microsoft has always been tied to Intel and the fact that it’s now embracing ARM is an acceptance that ARM is the dominant force in mobile and now perhaps beyond mobile,” said Paul Morland, an analyst at Peel Hunt in London.

ARM, based in Cambridge, England, signed a licensing agreement with Microsoft in July, to let the company access designs to build its own devices. ARM may start receiving royalties on chip shipments from 2012, Morland said.

The shares have climbed 14 percent since the start of 2011, giving the company a market value of 6.4 billion pounds ($9.9 billion).

The Windows software will be tailored for battery-powered devices, such as tablets, netbooks and other handhelds, Washington-based Microsoft said yesterday at the Consumer Electronics Show in Las Vegas.

While other versions of Microsoft programs aimed at phones and mobile devices already work on ARM chips, this is the first time the software maker will produce a full version of Windows available on that technology.

The operating system also marks a shift in Microsoft’s alliance with semiconductor maker Intel Corp., which has struggled in tablets and mobile devices.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.