During the fourth quarter, more than half of all smartphones shipped contained ARM's processor technology, helping it grow revenue even as demand cools in markets such as China. The company's v8 architecture has helped ARM offset waning demand for smartphones, and contributed to a rising fourth-quarter profit and revenue.

Chief Financial Officer Chris Kennedy said that a 14 percent rise in revenue in the fourth quarter, was driven by strong royalties.

Processor royalty revenues rose 24 percent, defying a 3 percent drop in industry revenue for chips in smartphones, although they were boosted by a $9 million late payment.

"We expect chips based on our latest version 8 technology will continue to replace older ARM technology in mobile markets, and gain share in networking infrastructure and servers," Kennedy said.

"It will end up in every phone, even down in the low end."

ARM reported a 17 percent rise in pretax profit to 138.7 million pounds on revenue, up 14 percent to $407.9 million, for the three months to end-December.

Kennedy said based on current market conditions revenues for 2016 would be "broadly in line" with expectations, which stand at about $1.64 billion.

However, ARM is also looking to the automotive industry to fuel growth over the next five years.

The company is workin gon the development of products that will be shipped in the future, such as driver assistance, in-vehicle automation and self-driving cars as growth markets.

Automotive technologies represented nine of the 51 agreements that ARM signed to license its chips to manufacturers in the fourth quarter.