Hundreds of Arm employees face an uncertain future amid a carve-up of a major division at the Cambridge chip maker that was left out of Nvidia’s $40bn (£30bn) takeover.
Arm’s Internet of Things Services Group, which sources told The Telegraph includes around 500 staff, was excluded from Nvidia’s takeover plans, despite executives lavishing praise on the so-called “IOT” sector’s prospects.
Staff in Glasgow, Cambridge, Belfast, and Mountain View, California, are employed as part of the group.
Arm has spent the last four years expanding its internet of things teams, which create technology to connect billions of gadgets, from smart speakers to light bulbs, to the internet.
According to the terms of the deal, Arm is undergoing an “internet of things services group reorganisation plan”. This will see Arm separate two businesses, called Pelion and Kigen, into a new holding company.
An Arm spokesperson said once the division is reorganised, it is expected to be “transferred out of Arm prior to closing of the transaction”.
However, some of the businesses are already being affected by cut backs. Scottish newspaper The Herald reported earlier this month that 21 staff at Arm’s 90-person Glasgow office had been warned their jobs were at risk.
Arm's spokesperson said the new teams “are taking some steps to ensure their resources align with the appropriate level of investment including redundancies”.
Terms for the deal say that the sellers, Japan’s SoftBank, and Arm have until December to complete the restructuring of the division, and then “sell, transfer, dispose of, wind down or do otherwise” with the new group.
Arm had previously said it would split off its internet of things services division and merge it into the SoftBank Vision Fund. But in August, it reversed this decision and said it would keep them as part of Arm.
The divisions include Arm Cloud Services, based in Glasgow, and Treasure Data, a US business Arm acquired for $600m. SoftBank is said to have been seeking a $1bn price tag to sell Treasure Data.
When Arm was bought by SoftBank for £24bn in 2016, its vision was to see Arm’s technology used to power trillions of internet of things devices. Arm aggressively expanded in this area and went on an acquisition spree. Now, the future of the business is unclear.
This comes despite Jensen Huang, Nvidia’s chief executive, praising the work done by Arm under the ownership of SoftBank to expand its internet of things capacity, and speculating how such technology could be improved with Nvidia's artificial intelligence technology. In a call with reporters on Monday, Mr Huang said: “We have the enabling technology to bring about this internet of things vision.”
Mike Clancy, secretary general of the tech workers union Prospect, said the deal was “worrying” for workers at Arm. “It is not too late for the government to impose some binding conditions on the sale and secure a stable future for Arm,” he said.