This could be the year that a mass market for advanced mobile phone handsets begins to appear in Europe, according to U.K. chip designer ARM Holdings.

With the increasing stability of technologies such as GPRS (general packet radio service), devices that can handle data are likely to become more attractive, the company believes.

The company said it sees more than 20 million Bluetooth products shipping this year. 

ARM designs the processor cores that drive many mobile devices, such as mainstream mobile phones and handheld computers running on Microsoft's PocketPC software. Despite the slowdown in all high-tech markets, ARM expects wireless shipments to increase this year and for more of those devices to handle data and multimedia.

The company on Monday reported a 42 percent rise in pre-tax profits for its 2001 financial year. The results marked its 16th quarter of hitting forecasts since going public.

Many of the mobile phones scheduled to arrive later this year will use more powerful ARM cores, or even several ARM-based chips in one device. A smart phone running applications would use an ARM9 core, while an ARM7 core would be added if the device also used Bluetooth, the short-range wireless networking technology.

"Besides absolute growth in handsets, under the skin there will be opportunities for multiple solutions as well," said Pete Magowan, executive vice president of business development for ARM.

A strong Asian market for data-driven mobile phones contributed to ARM's strong earnings for the past year, and the company says Europe is moving in the same direction.

"Speaking personally, the people I know wouldn't get any new handset that wasn't GPRS or multi-mode these days. And operators are keen to have people move on to packet (data)-based systems," Magowan said. "We expect more of these higher-end packet-rich multimedia products coming out at CeBIT time." CeBIT begins in mid-March.

Other areas that are showing strong growth are security, imaging and networking, Magowan said.

Since Sept. 11, interest in security has increased across the board, with particular emphasis on mobile commerce encryption and encryption for terminals, Magowan said. In the imaging market, ARM chips are replacing older processors that currently run on consumer-grade printers and digital cameras.

ARM expects wireless LAN products to keep growing strongly this year, and for Bluetooth shipments to continue to increase.

Last year about six million Bluetooth devices shipped, but this year it will hit 20 million, Magowan estimated.