Cambridge chip designer ARM Holdings issued a bullish forecast going forward despite seeing its share price hit by falling income and profits in the second quarter and first half of 2009.

Chief executive Warren East said ARM was still outstripping the market and was confident of a strong riposte in the second half of 2009.

The stock fell more than 4 per cent (almost 6p) to 126.50p at one stage after the results were announced.

Net income declined to £6.42 million from £8.66m year-on-year and profit tumbled 26 per cent on only slightly lower sales revenues – down from £65m to £64.8m.

Analysts polled by Bloomberg had predicted profit of £4.24m on revenue of £66.3m.

Warren East remained defiant. he said: “The resilience of ARM in a difficult trading environment is demonstrated by these results for the first half of 2009.

“We continue to outperform the semiconductor industry; whilst ARM H1 dollar revenues declined 14 per cent, overall industry revenues declined 30 per cent. ARM technology-based chips continue to gain market share in both mobile and non-mobile applications. 

“Demand for the latest ARM technology remains robust as customers maintain high interest in licensing Cortex™ -A processors for smartphones and mobile computing, Cortex-M processors for microcontrollers and physical IP technology for advanced process nodes.

“With recent signs of increasing industry activity we expect that ARM's trading performance will be on an improving trend in the second half of the year”

East added that while the trajectory of end-consumer demand remained unclear, prospects for the semiconductor industry generally in the second half were more positive.

ARM reiterated guidance that it expected group dollar revenues for the full year to be at least in line with current market expectations.