IBM (NYSE: IBM) thas agreed to license processor designs from ARM Holdings as losses mount at its hardware division.

ARM’s chip technology is used in mobile phones and is increasingly being deployed in more demanding devices such as servers and networking equipment. IBM says the ARM technology will be used in new microprocessors designed for “custom-chip clients, leading companies that build network routers, switches and the cellular base stations that enable pervasive wired and wireless communications across the globe.”

“IBM is a top provider of custom-built, system-on-a-chip technology to communications companies – the silicon technology that has powered much of the mobile computing revolution,” added Steve Ray, vice president of Microelectronics, IBM. “With the addition of ARM’s advanced 32-bit microprocessors and peripherals to our Power-based offerings, our clients will now have the broadest array of leading silicon technology and design services available – giving them the ability to create the next generation of communications hardware.”

PC World noted that the licensing deal is the latest in a series of agreements between the two companies dating back 13 years. As for the reasoning behind the latest move, the magazine noted that IBM appears to be eyeing solutions geared to mobile solutions.

“It certainly could be part of a larger network-to-the-endpoint offerings,” Charles King, principal analyst at Pund-IT, told PC World.

The agreement covers the ARM Cortex-A15, Cortex-A12, Cortex-A7 and Cortex-M4 processors plus ARM Mali-450 Graphic Processing Unit (GPU).

According to ARM, the technology will help IBM provide solutions to “leading networking infrastructure companies worldwide.”

IBM said last week that the hardware business continued to drag the company down, with revenue in the unit declining 17 percent in the third quarter. The company lost $713 million in its hardware business in the first nine months of this year, compared with $253 million in profit in the year-earlier period.

Chief Executive Officer Ginni Rometty shook up the management of the division in April, replacing Rod Adkins with Tom Rosamilia, who had been overseeing corporate strategy.

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