By Josh Ong

Published: 09:10 PM EST (06:10 PM PST)

Bolstered by record sales of Apple's iPhone and iPad, chip designer ARM Holdings announced its highest ever annual revenue and earnings Tuesday.

The Cambridge, UK-based company, which Apple founded in 1990 as a joint venture with Acorn Computers and VLSI Technology, revealed £113.9 milion ($179 million) in fourth quarter revenue to finish the year with record 2010 pre-tax profits of £167.4 million ($263 million).

Shares of ARM stock on the London Stock Exchange jumped 6.1 percent on the news to reach a 10-year high.

"ARM continues to sign licenses with influential market leaders in an increasingly digital world, and as the industry chooses ARM technology in a broadening range of electronic products, it further drives our long-term royalty opportunity," said ARM Chief Executive Officer Warren East. "The growth in licensing and royalty revenues, throughout 2010, has combined to deliver our highest ever annual revenues, profits and cash generation."

"It's hard to see what could have been better in this set of results. We've had a record in terms of earnings, and a record backlog up 75pc [compared with last year]," said East, adding that ARM had outperformed the semiconductor industry and expects to continue to outperform in 2011 as well.

Apple CEO Steve Jobs sold off his company's stake in ARM shortly after his return in an effort to balance the company's books. In 2001, Apple went with ARM processors for the first iPod and has maintained a long-term partnership ever since.

That partnership culminated in the custom ARM-based A4 System on a Chip, which now powers the iPhone, iPad, iPod touch and Apple TV.

""We have a chip called A4," said Jobs when he unveiled the iPad, "which is our most advanced chip we've ever done that powers the iPad. It's got the processor, the graphics, the I/O, the memory controller -- everything in this one chip, and it screams."

Reports have suggested Apple will use a multi-core ARM Cortex chip in its next-generation iPad and iPhone.

Last April, rumors that Apple, as ARM's biggest customer, would use its stockpile of cash to purchase the chip designer helped boost ARM's stock price.

As Intel has floundered in the mobile arena, ARM's low-power designs have steadily gained momentum. According to the company's most recent financial report, ARM has shipped 1.1 billion chips into mobile devices and 0.7 billion chips into other devices, ranging from smart-meters to solid-state drives.

ARM won a huge victory last month when Microsoft announced its plans to port the next version of Windows to ARM's SoC architecture. Intel Intel's responsed to the news by saying it had "tried to get [Microsoft] to do a tablet OS for a long time." As it stands, Microsoft's decision to adopt the ARM architecture was a huge blow to Intel, whose long-running alliance with Microsoft on desktop PCs has been dubbed 'Wintel.'

For its part, Apple continues to post consecutive record quarters. First quarter fiscal 2011 revenue reached $26.74 billion for a profit of $6 billion. Apple sold 16.24 million iPhones, 4.13 million Macs and 7.33 million iPads in the December quarter.