UK Semiconductor Company ARM Faces Wave of Layoffs in China

Multiple Adverse Factors Including Weak Smartphone Market and US Sanctions on China Impact

UK semiconductor design company ARM has begun workforce restructuring in China amid poor performance due to a slowdown in growth in its core smartphone semiconductor business.

On the 18th (local time), Bloomberg News reported, citing multiple sources, that ARM recently laid off about 70 software engineers. The sources said some of those laid off are waiting for offers to be reassigned to other roles.

ARM's recent workforce adjustment is interpreted as a cost-cutting measure in response to deteriorating performance. After announcing its Q3 results last month, ARM revealed in a conference call that the proportion of revenue from China accounted for 20% of total sales, down 5 percentage points from the previous 25%.

In a statement, ARM explained, "We are reorganizing Chinese software engineering resources to focus on direct support for local developers so that the Chinese software ecosystem can maximize the advantages of ARM's performance and features."

Earlier, ARM China, a joint venture established by ARM and Chinese investors, laid off about 100 employees earlier this year. Sources said most of the laid-off employees were research and development (R&D) engineers.

Headquartered in Cambridge, UK, ARM holds core technologies in semiconductor design that serve as the "brain" of IT devices such as PC central processing units (CPUs) and smartphone application processors (APs). As of the end of last year, it held a 99% share of the smartphone AP design market. It was acquired by SoftBank and listed on the US Nasdaq market last September.

On the day, ARM's stock closed at $68.87, down 3.04% from the previous session. ARM's stock has continued to underperform due to multiple adverse factors, including the slowdown in growth of its main market, the smartphone market, US sanctions risks related to China, which accounts for a large portion of its sales, and SoftBank's investment failures.