Arm chief executive Simon Segars
Credit: Corbis News
The boss of Arm has warned that the company could be forced to cut investment and jobs if the British technology company were to go public instead of being sold to Nvidia.
Simon Segars, Arm’s chief executive, told The Telegraph that the public markets were the “worst place to go” and could force it to address costs after a years-long spending drive that has seen it hire thousands of UK staff.
Opponents of the $40bn (£29bn) sale to Nvidia have urged Arm to relist its shares, five years after the company was sold to SoftBank, and have suggested major tech companies could back a flotation if the deal is blocked.
But Mr Segars dismissed the claims, indicating that Arm would not be able to sustain the investment that has seen it double its UK staff numbers in the last five years and has largely wiped out the company’s profits.
“We’ve got over 6,400 people today, that is significantly higher than what it was when we were acquired [by SoftBank], and our profitability is very, very low,” Mr Segars said.
“Those parameters do not seem to fit well with public markets. Either the top line [would] have to spike up enormously in order to support the cost base that we have, or we’d have to adjust the cost base. So I think the public markets are the worst place we could go, given the environment that we’re in.”
Cambridge-based Arm employs more than 3,000 people in Britain.
Mr Segars’ warning comes as competition regulators in the UK, US, China and Europe scrutinise the Nvidia deal, which was announced last year.
Last month, Qualcomm’s chief executive Cristiano Amon told The Telegraph that the US chip company would be willing to invest in Arm as part of a consortium taking the company public. MPs have asked for assurances about Arm’s future if the deal is approved.
Nvidia chief executive Jensen Huang has promised to protect investment
Opponents of the deal, believed to include Qualcomm, Microsoft and Google, have raised concerns that Nvidia buying Arm could threaten the British company’s independence, which sees it license its chip designs to hundreds of customers.
Arm’s chip designs power billions of smartphones, tablets and wearable devices.
The company has been on a spending spree under SoftBank as it seeks to move beyond smartphones into newer areas such as the internet of things and data centres, which Mr Segars said he hoped would be sustained under Nvidia’s ownership.
“As we start to work with Nvidia and think about how we go deep into some of these markets… that’s going to require more people, not less.
“I think with this level of investment put behind it, Arm’s influence on tech is going to continue to grow and won’t be diminished and won’t be constrained.”
Nvidia’s chief executive Jensen Huang has said he is willing to sign a legally binding pledge around investment in the UK, although it is unclear if this would include a cast-iron guarantee on jobs.
SoftBank has pledged to double the number of Arm employees in the UK to 3,494 by this September, five years after its £24bn takeover.
The Japanese company had said it planned to relist Arm before the Nvidia sale was announced. Mr Segars said it had not come close to appointing advisors or writing listing documents in preparation for a float.