SoftBank’s Arm China lays off workers to cope with weak outlook

The China joint venture of SoftBank Group Corp’s chip technology firm Arm laid off 90 to 95 employees last week to cope with a challenging business outlook this year, according to two sources familiar with the situation.

Those who lost their jobs were mostly engineers in research and development, the sources said. Before the lay-offs, Arm China had about 700 employees; there were no lay-offs last year when British firm Arm had cut jobs affecting up to 15 per cent of its global workforce, one of the sources added.

The lay-offs come as SoftBank tries to set up a public listing for Arm this year. The China market has been a major source of growth, although a two-year management dispute at the joint venture unit that resulted in the ousting of Arm China’s former CEO created some challenges.

Arm China declined to comment. British firm Arm said in a statement that “Arm China is a separate company from Arm, 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.”

Arm China is the exclusive distributor of Cambridge, England-based Arm’s licences in the country. It collects payments and sends them to Arm, which delivers the technology directly to customers.

Last year’s lay-offs at Arm came after a failed takeover attempt by Nvidia Corp because of regulatory hurdles. The collapse of the sale was a major setback for SoftBank when valuations across its portfolio of companies came under pressure.

One of the sources said some customers are concerned about Arm potentially changing how it charges royalties, as well as US-China geopolitical tensions that could block Chinese companies’ access to Arm technology.

Chinese companies, including Huawei Technologies Co and Alibaba Group Holding, have been restricted from using some of Arm’s technology in recent years. Alibaba owns the South China Morning Post. South China Morning Post