Chipmaker Arm plans job cuts after failed sale

British-based computer chipmaker Arm has announced plans to cut up to 15 percent of its staff around the world following the collapse of a $40 billion deal for its sale from Japanese conglomerate Softbank to United States-based company Nvidia Corp.

Most of the losses among its global workforce of 6,400 will be in the United Kingdom and United States.

"Like any business, Arm is continually reviewing its business plan to ensure the company has the right balance between opportunities and cost discipline," a company spokesperson told the Euronews website. "Unfortunately, this process includes proposed redundancies across Arm's global workforce."

A huge rise in sales of electronic devices during the COVID-19 pandemic has seen a surge in demand for computer chips from all over the world, with many industries, such as automotive production, having been badly hit.

In the US, both Ford and General Motors have resorted to selling cars without non-essential features, which can be updated when chips become available, in order to clear production backlogs, and production of Minis at a plant in Oxford in the UK was suspended because of chip shortage.

In February, 18 months after it had first been announced, Softbank abandoned the sale to Nvidia, first valued at around 36 billion euros ($39.5 billion) but later rising to 73 billion euros.

A joint statement issued by Softbank and Nvidia at the time said they were terminating the deal because of "significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties".

In the aftermath of the collapsed deal, SoftBank's chief executive Masayoshi Son said the company would "take this opportunity and start preparing to take Arm public, and to make even further progress".

Nvidia also indicated that it was keen to remain a close working partner with the company.

"Arm is at the centre of the important dynamics in computing," Jensen Huang, Nvidia's founder and chief executive, was quoted as saying by The Guardian newspaper. "I expect Arm to be the most important (computer processing unit) architecture of the next decade."

Mike Clancy, general secretary of the union Prospect, which represents scientists and engineers, said the news of the job losses "will send shockwaves to thousands of Arm employees worried about their jobs".

"We always knew there was a risk once the sale to Nvidia fell through that the company would seek to restructure or cut costs," he added. "We urgently need leadership from government now to protect British jobs and British research and development spending."