SoftBank’s Arm China lays off workers amid challenging business outlook: Sources

OAKLAND, California – SoftBank Group’s chip technology firm Arm Limited’s China joint venture laid off 90 to 95 employees last week to cope with a challenging 2023 business outlook, according to two sources familiar with the situation.

The layoffs come as SoftBank tries to

set up a public listing for Arm

in 2023. The China market has been a major source of growth, although a two-year management dispute at the joint venture that resulted in the ousting of the chief executive created some challenges.

The sources said that those who lost their jobs were mostly engineers in research and development.

Before the layoffs, Arm China had about 700 employees; there were no retrenchments in 2022 when parent Arm Limited had global layoffs affecting up to 15 per cent of its workforce, according to one of the sources.

Arm China declined to comment.

Arm Limited said in a statement that “Arm China is a separate company from Arm Limited, and while we cannot comment on its personnel decisions, we do not expect any disruption to our business in China, which continues to remain strong”.

Layoffs in 2022

came after Nvidia failed to take over Arm because of regulatory hurdles. The collapse of the sale marked a major setback for SoftBank’s efforts to generate funds when valuations across its portfolio were under pressure.

Arm China is the exclusive distributor of Arm licences in China. It collects payments and sends them to Arm Limited, which delivers the technology directly to customers.

One of the sources said that some customers were concerned about Arm potentially changing how it charges royalties, as well as geopolitical tensions between the United States and China that could cut off access to Arm technology.

Chinese companies, including Huawei Group and Alibaba, have been restricted from using some of Arm’s technology in recent years. REUTERS