LONDON — British chip designer Arm is planning to cut up to 1,000 jobs, or 15% of its workforce, just weeks after its $40 billion deal with Nvidia collapsed.
Widely regarded as the jewel in the crown of the U.K. tech sector, Arm employs employs around 6,400 people worldwide and roughly half of those are in the U.K.
“Like any business, Arm is continually reviewing its business plan to ensure the company has the right balance between opportunities and cost discipline,” an Arm spokesperson told CNBC Tuesday.
“Unfortunately, this process includes proposed redundancies across Arm’s global workforce.”
They added: “If the proposals go ahead, we anticipate that around 12-15% percent of people in Arm would be affected globally.”
While Arm is headquartered in Cambridge, England, the company has been owned by Japanese tech giant SoftBank, which paid around $32 billion for the firm in 2016.
SoftBank announced in Sept. 2020 that it planned to sell Arm to U.S. chip giant Nvidia for $40 billion but the deal was scrapped in February following a period of intense scrutiny from competition regulators in the U.S., EU, China, and the U.K.
Opponents had several gripes, but the main issue with the deal was around access to Arm’s innovative chip designs.
Arm licenses its “architecture” to hundreds of companies around the world. Apple uses them in iPhones and iPads, Amazon uses them in Kindles, and car manufacturers use them in vehicles. If Nvidia stopped other companies using Arm’s chip designs in their semiconductors then analysts said the implications could have been huge.
Critics of the deal also suggested that Nvidia may cut jobs at Arm once it took ownership of the company. However, Nvidia repeatedly stressed that it wanted to invest in Arm.
Former Arm CEO Simon Segars told The Telegraph last July that the company may need to cut jobs if the Nvidia deal was blocked.
SoftBank is now planning to take Arm public with the Nvidia deal off the table. Masayoshi Son, SoftBank’s CEO, said in February that the company will most likely be listed on New York’s Nasdaq stock exchange.
However, pressure is mounting on SoftBank to dual-list the company.
Julian Rowe, general partner at tech investment firm Latitude, told CNBC that the U.K. government should be doing all it can to make sure homegrown successful tech businesses like Arm are not being sold too early and too cheaply to international acquirers, or choosing to take their valued listings overseas.
“History will tell you that Nasdaq or NYSE might be a more natural home for a chip designer like Arm, but that underestimates the degree to which Arm is arguably the least known success story in U.K. tech and the special position it can occupy through a London listing,” Rowe said.
“It has the potential to become a standard bearer in the U.K. high growth tech scene.”