It's still firmly in the realm of rumour, but Cambridge-based ARM is rumoured to be the target of a potential acquisition by Apple.

ARM-designed chips are becoming a common sight in today's gadgets and the UK company is one of the country's biggest tech success stories.

The link to Apple has rippled across both the news sphere and the market, although some analysts already questioning its validity.

£3 billion

Apple bought chip specialists PA Semi in 2008, and used its designs in the current gadget sensation the iPad.

With ARM likely to cost over £3 billion, the acquisition would represent a massive financial risk for Apple.

The fact that ARM is even being talked as a potential target for Apple is testament to the growth the company has made in recent years.

Shares in the chip designer rose 1.8 per cent to 243p as news of the link circulated.