Arm China laid off nearly 100 people, and the company’s CEO said he would strive to complete an IPO within this year.

On the morning of February 13, in response to the news of layoffs at the Chinese joint venture Arm Technology, a British chip architecture company owned by Japan’s SoftBank Group, Arm stated in a statement displayed to TMTpost Media App that “Arm Technology (Arm China) It is an independent and operating entity from Arm, and we cannot comment on its personnel arrangements, but we expect that our business in China will not be affected in any way and will continue to maintain strong development momentum."

Earlier media reported that after Arm announced 15% of its global layoffs, Arm China has also launched a "layoff storm" in the past two weeks, involving nearly a hundred people (90-95 people), most of whom are R&D engineers, mainly including SoC (system-on-chip) ) and HPC (High Performance Computing) departments to cope with the challenging business prospects and conditions in 2023.

It is understood that the news is basically true. This layoff will give Arm China employees "N+3" compensation. The departments mentioned above are all so-called self-research sectors established under the leadership of Wu Xiongang, the former Chairman and CEO of Arm China. Therefore, this layoff may not involve Arm's global core business. , some insiders said that the layoffs were mainly to clear business obstacles for IPO listing. Amou Technology said it would not comment on this.

It is reported that Arm is the world's largest chip semiconductor intellectual property (IP) provider. It mainly provides underlying architecture and chip "power" support for mobile device processors from companies such as Apple, Samsung and Qualcomm, accounting for more than 90% of the mobile CPU market. %, most Chinese chip companies use the ARM architecture to design and build equipment from smartphones to servers. For every chip sold, Arm will receive higher patent royalties. In 2016, SoftBank spent $32 billion to acquire Arm and privatize it from the New York Stock Exchange.

Arm Technology (Arm China) is a joint venture established by Arm in China in 2018. It is also the only licensing platform for Arm technology IP in China. The domestic cooperation patent performance is consolidated to Arm Corporation, which directly provides technology to customers and cooperates with it. Partners include Alibaba, Unisoc, Huawei, etc., which are extremely important to China's chip semiconductor industry. As the largest single shareholder of the joint venture, Arm holds 47.33% of the shares of Arm Technology.

In the two years from June 2020 to May 2022, a power seizure occurred in ARM Technology, which affected the development of the chip industry to a certain extent.

In June 2020, Arm joined forces with SoftBank and other shareholders to try to remove Wu Xiongang, but Wu Xiongang refused to hand over the company's official seal, and the removal reached a deadlock;

On February 8, 2022, Nvidia's acquisition of Arm failed. Masayoshi Son, founder of Japan's SoftBank Group, said that Arm began to prepare for an independent listing and decided to integrate Arm's Chinese equity;

On April 29 last year, the Board of Directors of Arm China announced the appointment of Liu Renchen and Chen Xun as the company's co-CEOs, and completed the industrial and commercial registration in accordance with the law. Within the next week, the new management obtained the company's principal authority from Wu Xiongang and successfully took charge of Arm China. , this coaching change controversy has come to an end. After the storm settled, Liu Renchen, co-CEO of Amou Technology, reiterated at the staff meeting that the company would adhere to the "four constants" principle in future operations and once again clarified the right to independent research and development.

In the past six months or so, Arm has accelerated the pace of its IPO listing, replaced Jason Child as its new chief financial officer, and appointed Spencer Collins as the company's executive vice president and chief legal officer, as well as former AOL chief financial and administrative officer Karen Dykstra and Raine Group. Founder and partner Jeff Sine, Build Collective head Tony Fadell, former Qualcomm CEO and executive chairman Paul E. Jacobs, and former Intel executive Rosemary Schooler have joined Arm's board of directors.

In February this year, as the controlling shareholder of Arm, SoftBank Group CFO Yoshimitsu Goto reiterated the company’s plan to promote the listing of Arm in fiscal year 2023. Arm CEO Rene Haas later said in an interview that the company will strive to complete the IPO this year. He also said that the preparations for the IPO are "progressing well" and "we are doing our best and are committed to achieving this goal this year."

Currently, Arm is one of the few profitable businesses of SoftBank Group, which is one of the reasons why Son is eager to promote Arm’s listing.

According to the latest financial report released by Japan's SoftBank Group in February, due to the impact of the 100-billion-dollar SoftBank Vision Fund's slump in technology stocks, SoftBank's net loss in the third fiscal quarter was 783.415 billion yen (approximately US$5.928 billion), of which the Vision Fund continued It posted a loss in the fourth quarter. But at the same time, Arm's revenue is good, with total revenue in the third quarter reaching US$746 million, a year-on-year increase of 28%, and royalties increased by 12% in the quarter. Among them, partners' shipments of Arm-based chips reached 8 billion, pushing the cumulative shipments of Arm-based chips to more than 250 billion.

However, there are still several major obstacles that need to be cleared before Arm's IPO listing. One of them is that Arm’s licensing agreement with Qualcomm and Nuvia and trademark infringement litigation are ongoing, which may delay Arm’s listing process; the other is that the listing location is uncertain. In June last year, Sun Zhengyi said that most of Arm’s customers are in the United States, so Arm is likely to choose to be listed on Nasdaq in the United States. However, in the tripartite talks with British Prime Minister Sunak and Rene Haas at the end of 2022, Sun Zhengyi did not rule out the possibility of dual listing, that is, Arm may be listed in both the United Kingdom and the United States. Listed on different stock exchanges. However, if you choose dual listing, you will face cost and regulatory pressure, which may also become one of the obstacles to Arm's IPO.

According to QUICK FactSet data, as of the end of November last year, the total market value of the US capital market was US$42 trillion, approximately 14 times that of the UK. The U.S. stock market also has a large trading volume, while the United Kingdom has easy corporate financing, but its total capital market value is lower than that of the United States, China, Hong Kong stocks, Japan and India, ranking sixth in the world.

Therefore, if SoftBank finally decides to list Arm separately in the United States, this move will further highlight the decline of the London Stock Exchange after Brexit.

In fact, in the industry downturn in recent months, global chip companies have collectively entered a "wave of layoffs." Chip giant Intel, memory chip giant Micron, chip equipment giant Lam Research, EDA and IP leader Synopsys and other companies have all announced layoffs, ranging from a few hundred to 20,000 people. According to TMTpost Media App understands that many domestic chip companies have also begun to plan "cost reduction and efficiency improvement" measures such as layoffs to cope with this year's industry challenges.