It’s a big market for little chips: 2.6B ARM chips shipped last quarter

ARM Holdings(s armh), the U.K.-based company that architects the small chips powering most smartphones and tablets these days, is reaping huge benefits from the mobile market. On Tuesday, the company reported a 44 percent boost in pre-tax profits for the first quarter of 2013 and a 26 percent jump in revenues from the year ago quarter. Two data points explain the rise: 2.6 billion ARM-based chips where shipped in the first three months of the year while ARM’s Mali graphics chips have seen a five-fold increase in sales from a year ago.

Apple Event 10/4 - Phil Schiller introduces the A5 chip in the iPhone 4SUnlike Intel(s intc) at the other end of silicon spectrum, ARM doesn’t build or fabricate chips. Instead, it designs the chip¬†architecture¬†and receives license and royalty fees from companies that use the designs. Apple’s(s aapl) A-line processors, Samsung’s Exynos and Qualcomm’s(s qcom) Snapdragon chips, for example, are all based on ARM designs. Essentially, every new smartphone or tablet — with a few rare exceptions — runs on a ARM-based chip.

As a result of high demand for mobile computers, the shipment of ARM chips is up 35 percent from a year ago. That figure shows a sharp contrast with higher-performance desktop and laptop computers: smartphone sales passed those of the PC sales in 2011 and I’m on record suggesting that tablet sales will do the same later this year. Is it any wonder that some are dubious about Intel’s future in the mobile market, given that ARM-based chips have it wrapped it up for now?

Intel is making some progress with its Atom chips but ARM continues to dominate and grow the mobile segment. The company now has 973 revenue-generating licensees, with 22 of them signed this past quarter. If the market for wearable gadgets takes off — as I suspect it will, although it’s really just getting started — ARM seems poised to continue powering most mobiles for some time yet.