British chip designer ARM Holdings has reportedly said it will axe 15 percent of its workforce, which could result in the loss of up to 1,000 jobs.
On Monday the Daily Telegraph reported it had seen an email to ARM staff from newly appointed CEO Rene Haas, in which he outlined the rationale for the job losses.
The move comes after former CEO Simon Segars resigned last month, when the $40bn sale of ARM Holdings to Nvidia, which Segars had strongly favoured over an IPO, was called off due to “significant regulatory challenges”.
In the email to staff, new CEO Rene Haas wrote that “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.”
He reportedly stated that 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 reportedly wrote.
ARM employs 6,400 staff around the world, 3,000 of which are based in the United Kingdom.
The firm reportedly plans to axe between 12 and 15 percent of staff globally, with the headcount reduction expected to fall most heavily in the UK and US.
“Like any business, ARM is continually reviewing its business plan to ensure the company has the right balance between opportunities and cost discipline,” the firm was quoted by the Guardian newspaper as saying.
“Unfortunately, this process includes proposed redundancies across ARM’s global workforce.”
ARM is currently owned by Japanese firm SoftBank, after it had acquired ARM for $32bn in 2016.
Following the Nvidia deal collapse last month, SoftBank said it would revert to its backup plan of an initial public offering (IPO).
Masayoshi Son, the CEO SoftBank, indicated that ARM would likely be publicly listed on NASDAQ in the United States, and not on the London Stock Exchange, before March 2023.
The UK government of course wants its biggest and best tech companies to list on home soil, but there is little doubt that a US listing is more attractive, as firms tend to achieve higher valuations on the NASDAQ or the New York Stock Exchange compared to other exchanges.
It should be remembered that ARM was actually dual-listed in London and New York until 2016, when SoftBank acquired it – an acquisition the UK government at the time welcomed, despite concern five years ago at ARM falling into the hands of a foreign entity.
ARM was formed in 1990 when it was spun out of Acorn Computers and its chip designs are used in 95 percent of smartphones in use today because of their low power consumption.
Rather than manufacture chips, it licenses designs to other companies like Qualcomm and MediaTek.
Firms with low cost bases tends to attract investor interest.
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