Arm wrestles with job cuts backlash

Cambridge and California will bear the brunt of around 1,000 job losses forced on superchip architect Arm following the collapse of NVIDIA’s proposed $40 billion acquisition.

Unconfirmed reports suggest that as many as 600 redundancies could be made at the Cambridge UK headquarters with California taking the rest of the backlash.

The news is in stark contrast to the multibillion dollar investment plans with attendant recruitment surge in Cambridge and globally that NVIDIA had pledged before being driven away by competition hawks in the UK, Europe, the US and China. So instead of a boom, Cambridge gets if not a bust then certainly a banana skin.

Arm doesn’t talk numbers and prioritises informing staff ahead of the media but new CEO Rene Haas concedes that the redundancies could affect between 12 and 15 per cent of the global workforce.

Arm employs around 3,000 staff in the UK and 6,500 globally. Its Japanese parent SoftBank is planning an IPO – certainly in the US but potentially a dual US-UK listing. Former CEO Simon Segars warned, however, that the IPO route would leave Arm short of expansion capital.

The official statement from Arm today read: “Like any business, Arm is continually reviewing its business plan to ensure the company has the right balance between opportunities and cost discipline. Unfortunately, this process includes proposed redundancies across Arm’s global workforce.”

Professor John Colley, Associate Dean of Warwick Business School and an expert on mergers and acquisitions, said: “No doubt there are a number of forces driving this substantial workforce reduction. First, the business has to be prepared to list, which means creating profits through reduced costs.

“Arm’s profits have reduced in recent years as they have focussed on the Internet of Things, which strategically has been a poor bet. No doubt that strategy has now changed which may mean surplus labour. 

“Second, with rampant inflation and the impact of sanctions arising from the Ukraine war, demand will fall for many of the products which use Arm’s chip designs. Arm will be left with an outsized workforce. 

“Third, the distraction of a protracted failed sale is usually a period when management lack focus on what needs doing. Now the sale has collapsed there is clearly some catching up to be done, not just in cost management but creating a new strategy for the company’s future.”