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In a recent move reflecting the downturn in the semiconductor industry, Arm Holdings Plc (NASDAQ:ARM) has parted ways with more than 70 software engineers in China.
What Happened: As per insider information, Bloomberg reported on Monday that the U.K.-based chipmaker’s recent actions mirror those of other big players in the industry like Qualcomm Inc. (NASDAQ:QCOM), who have also had to scale back their global workforce amid lower demand for electronics.
Around 15 of the laid-off staff are expected to be offered alternative roles related to projects within China. The terminated positions largely belonged to contract software engineers involved in various projects across Arm’s global operations.
Arm defended its decision to restructure its China software engineering resources, stating it was a bid to provide direct support to local developers.
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With global growth surpassing that of China, the country’s share in Arm’s global sales has dipped from 25% to approximately 20%, as revealed by CFO Jason Child in November. The firm, backed by SoftBank Group Corp. (OTC:SFTBY), has also been impacted by U.S. restrictions on technology exports to Chinese companies.
Arm is currently dealing with ongoing disputes with the ex-head of Arm China, adding to the company’s existing challenges. Earlier this year, Arm China, Arm’s sales office in the world’s largest semiconductor market, had to let go of over 100 employees.
Why It Matters: The layoff comes at a time when Arm has been grappling with multiple challenges. Back in August, the Softbank-backed company applied for an IPO with plans to raise between $8 billion and $10 billion from its IPO and reach a valuation of $60 billion to $70 billion. The company’s decision to restructure its software engineering resources in China is a strategic move to adapt to the changing landscape of the semiconductor industry.
With the downturn in the industry and the decline in China’s contribution to Arm’s global sales, the company has had to adjust its workforce to maintain competitiveness. Furthermore, U.S.-imposed technology export restrictions on Chinese firms add another layer of complexity to Arm’s operational environment.
Photo via Shutterstock.
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