After the failed deal with Nvidia, Arm plans to lay off about 15 percent of its staff or prepare for a re-listing

British chip design firm Arm plans to cut global staff by 12 to 15 percent after a failed acquisition deal with Nvidia.

Arm has about 6,400 employees worldwide, which means that the number of layoffs will be nearly 1,000 at most. The number of layoffs in each region has yet to be confirmed, but it is reported that Arm's layoffs will mainly be carried out in the United States and the United Kingdom, where the company's headquarters are located.

"Like any business, Arm is constantly reviewing its business plans to ensure the company strikes the right balance between opportunity and cost planning. Unfortunately, this process also includes proposed layoffs for employees worldwide. Arm said in a statement.

(Source: Arm)

Arm's new CEO, Rene Haas, mentioned that for the company to succeed in future opportunities, Arm must be more cost-conscious. "It's going to be a tough time for everyone, but I want to tell you why we're doing it," he said. To remain competitive, we need to eliminate duplication and no longer critical work and focus on areas that can drive rapid strategy implementation. ”

Haas also said Arm will help laid-off employees seek other jobs.

Regarding the layoffs, Former Arm CEO Simon Segars has warned that if the company is not acquired by Nvidia but re-elected to go public, its investment level will not be sustainable.

The failed deal with Nvidia also led to a change in Arm's management. Haas, the 59-year-old head of the intellectual property department, was promoted to CEO, while former CEO Sigus resigned for personal reasons.

Haas joined Arm from Nvidia in 2013 as vice president of strategic alliances and was later promoted to president and head of the intellectual property department in 2017. He also worked for Arm in China for a while.

Today, Arm's position in the chip industry is very important. From the most powerful data center chips to most smartphones like Apple to the tiny sensors used in home appliances, it plays a key role in every aspect.

"Arm's design and technology are ubiquitous," Arm's website reads, "about 70% of the world's population uses our architecture technology in a variety of markets, and more than 200 billion Arm architecture chips have been shipped to date." ”

It is understood that Japan's SoftBank acquired Arm in 2016, and in 2020, Nvidia announced plans to acquire Arm. But the deal ultimately failed due to strict regulation.

Regulators believe that after the completion of the transaction, Arm may no longer favor the entire ecosystem in terms of fairness, but more in the interests of Nvidia. The Federal Trade Commission (FTC) also emphasized that "Nvidia can even access Arm's customer list and learn about the sensitive information that competitors share with Arm, which will fundamentally upend Arm's position as a neutral partner." ”

It is worth mentioning that if the transaction is successful, Arm employees will be able to receive a certain amount of revenue from acquisition expenses and bonuses.

But in February 2022, Nvidia and SoftBank issued statements saying: "Despite the sincere efforts of both parties, there are significant regulatory challenges and the transaction has to be cancelled." ”

SoftBank said it will seek to re-list Arm in 2023, and the listing location is expected to be in the United States.

In addition, after the transaction fails, according to the terms of the agreement, "SoftBank will retain the $1.25 billion deposit prepaid by Nvidia," and Nvidia can obtain an Arm license for 20 years.

(Source: NVIDIA)

It is reported that in 2016, when SoftBank first acquired Arm, it experienced a round of recruitment boom, ready to rapidly expand Arm's influence in a short period of time, and intends to double its market value within five years.

Currently, newly appointed Arm CEO Haas is facing a long list of challenges, including ipos (Initial Public Offerings).

Now, as Arm prepares for an IPO, Haas will have to strike a more cautious balance between increasing spending and increasing profitability. He is already making decisions that are consistent with the plans exhibited by the listed company, such as controlling expenses and cutting less important lines of business.

It also mentioned that a large part of the reason for the failure of the transaction between Arm and Nvidia is from Arm's customers, including Qualcomm, Google, Apple and Samsung, who are worried that Nvidia will limit its access to Arm's key technologies.

Haas believes it's important to fix and maintain a stable relationship with these customers, and he doesn't want customers to seek alternatives to Arm technology, such as RISC-V.

Haas told the media that Arm's future is fraught with uncertainty after ending a tortuous deal. But it also gives companies an opportunity to refocus their focus. Right now, the first challenge is how to motivate employees and reinvigorate the company. While Arm has been financially out-of-the-box, he believes the company has a bright future.

In addition, SoftBank has been looking for ways to make Arm profitable quickly to increase its slow profitability and increase its value.

Speaking about recalibrating the strategy of selling Arm to an IPO, SoftBank CEO Masayoshi Son said, "Arm is at the center of innovation not only in the mobile computing revolution, but also in the cloud computing, automotive, Internet of Things and metaversal realms, and has entered its second growth stage. We will seize this opportunity to start preparing to launch Arm and develop further. ”

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reference:

https://www.telegraph.co.uk/business/2022/03/14/british-tech-champion-arm-slash-hundreds-jobs/

https://news.sky.com/story/arm-to-cut-up-to-1-000-jobs-after-40bn-nvidia-takeover-called-off-12566323

https://news.sky.com/story/arms-40bn-sale-to-nvidia-is-called-off-after-us-uk-regulatory-pressure-12536072

https://fortune.com/2022/02/08/new-arm-ceo-rene-haas-challenges-collapse-nvidia-deal-fired-china-head-softbank/

https://www.bbc.com/news/business-60745707#:~:text=UK%20computer%20chip%20designer%20Arm,the%20Cambridge%2Dbased%20company%20said.