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Arm Reportedly Freezes Hiring, Cancels Some Benefits Until Nvidia Takeover

Arm
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Nvidia’s bid to buy Arm might have just become even more contentious. Today the Register reported that Arm, until the Nvidia deal is finalized, has instituted a hiring freeze and canceled the annual “wellbeing” allowance it paid to employees.

The hiring freeze appears to be limited to the IP Products Group responsible for designing Arm chips, with other departments still being allowed to bring on new employees, but even hiring for those roles is said to have “slowed to a trickle.”

The Register said the hiring freeze also prevents the IP Products Group from replacing employees who leave the company, which seems more likely in light of Arm canceling the yearly allowance known as FlexPot introduced in 2016.

FlexPot reportedly offered varying amounts based on location, with U.S. employees getting as much as $8,500 for "activities that support you and your family’s health or financial wellbeing" and "any activities that allow you to learn something new."

That’s a significant amount of money Arm employees can no longer count on, and it wouldn’t be a surprise if many sought new employment as a result. The Register said employees did receive a bonus last quarter, however, which could engender loyalty.

A memo about the hiring freeze reportedly said: 

“The primary reason for this is that due to the accelerated hiring in the past six months, we are well ahead of our planned headcount. The market response has been fantastic, the selection process rigorous, and we have hired some exceptional people into Arm from across the globe. […] We are pleased to welcome these new hires from early careers through to experienced business leaders. However, we now need to take this action to ensure we are within the cost targets for the business.“

Companies often enact cost-saving measures when they’re on the verge of being acquired. Usually, it’s supposed to make sure the deal remains attractive to the buyer; however, it’s hard to believe Nvidia would back out of the Arm takeover.

Why? Partly because Nvidia just announced its first Arm-based CPU, and even though it could technically move forward with that, even if the acquisition never goes through, it would be strange to cancel the deal as that product is coming to market.

But it’s mostly because Nvidia’s already made a $2 billion commitment to the Arm acquisition—a $1.25 billion breakup clause—that makes it harder to justify backing out of the deal because of Arm’s hiring policies.

That $2 billion pales in comparison to the $40 billion Nvidia will pay SoftBank if the deal is approved, of course, and it’s possible that Arm‘s goal is to avoid giving new employees whiplash if the pink slips start to fly when the acquisition is closed.

Yet these new policies simply invite more criticism of the acquisition. Before, the complaints were mostly ideological—how could Nvidia maintain Arm’s neutral licensing approach when it’s designing its own chips with proprietary technology?

Now the deal has resulted in a hiring freeze in Arm’s core teams and what amounts to a substantial pay cut for many of its employees, and there’s no word on what happens if regulators block the acquisition. Will the freeze be lifted? Will the FlexPot system be reenacted? And how many employees will stick around to find out?

  • sizzling
    I believe this is standard stuff in this situation. I went through a situation where 1 FTSE250 company was taken over by another and it was very similar constraints put in place until the year after acquisition.
    Reply