Arm to drop up to 15 percent of staff – about 1,000 people
Move along, nothing to see here, totally not slimming down ahead of IPO – or a second IPO in China
Chip designer and licensor to the stars, Arm, has reportedly dropped around 1,000 workers onto unemployment queues.
An email to staff from Arm CEO Rene Haas, seen and reported by the UK's Daily Telegraph, states: "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done."
Haas, who has been in the chief exec's chair for about a month, added Arm needs "to be more disciplined about our costs and where we're investing."
"I write this knowing that although it is the right thing to do for Arm’s future, this is not going to be easy," he added.
Between 12 and 15 per cent of staff will be let go as a result globally. The biz employs 6,400 worldwide.
Arm spokespeople are having none of that, preferring a message that the redundancies are a regular trim of the sort a prudent business conducts from time to time and in no way a sign of any malaise or change in strategy.
Of course, Arm has had a change of strategy forced upon it by "significant regulatory challenges" that saw Nvidia call off its proposed $66 billion acquisition of Arm.
SoftBank, Arm's owner, responded to that setback with a plan to float the chip design firm by March 2023. That gives Arm plenty of time to get this round of redundancies done, let the unpleasantness fade, and write a prospectus that features a lovely low cost base.
Investors in new floats generally admire balance sheets that hint at strong future profits. Lowering costs ahead of an initial public offering is therefore an oft-deployed tactic.
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In Arm's case, this move may not be so well received if the firm sheds staff involved in product design or development. The planet is not exactly flush with such folk at present, and much of Arm's appeal to investors lies in its deep technical expertise. It is therefore likely that most of the redundancies will be staff not directly involved in Arm's core activities.
Arm China, meanwhile, is contemplating a float of its own. The rogue Arm outpost, which is led by CEO Allen Wu and majority owned by Chinese entities, has become something of a problem for Arm because Wu was fired but has managed to retain his position. The CEO told The South China Morning Post that Arm China has set its sights on its own float in 2025.
Given the plentiful global weirdness of the last two years – the COVID-19 pandemic was declared on March 11, 2020 – planning anything three years into the future seems rather optimistic. ®