Arm trims ‘blue sky’ research to streamline ahead of IPO

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Chip designer Arm is limiting its “blue sky” pursuit with the closure of a flagship technology division and refocusing its efforts towards more commercially viable products ahead of this year’s eagerly-anticipated public listing.

The Cambridge-based company dissolved Arm Research last year as part of a strategy implemented by chief executive Rene Haas which involved cutting 15 percent of jobs across the company. Arm said at the time that most of the cuts would be focused on general, administrative and other non-engineering functions.

John Biggs, an Arm co-founder who has spearheaded some of the division’s work by partnering with universities to research future applications of chip technology, has moved to a part-time role, according to people briefed on the move. Biggs, who has also now joined Pragmatic Semiconductor, another British chip company in which Arm is an investor, did not respond to a request for comment.

Several former employees who quit the chip designer last year say the closing of Arm Research, which employed about 150 people, demonstrated the company’s drive to cut back on speculative research about the future of the industry and instead focus on developing proven and potentially commercial products.

“It was about shifting the focus to short-term product development, with less focus on pursuing the blue sky,” said a former employee who said he left the group due to the department closure. “It’s a shame and it’s had a lot of internal backlash from people who think it’s very short-sighted.”

A person close to the company said that more than half of the people who work at Arm Research have been redeployed to other parts of the organization. The “Blue Sky” research is still ongoing, the person said, “but with a stronger link to the future direction of the business,” adding that the company is looking 10 years ahead in several areas.

Arm “had to maintain reasonable control of investments,” they added.

The owner of British group SoftBank hopes to raise billions of dollars by floating Arm in New York this year as it looks to turn its fortunes around after posting record annual losses of 5.3 trillion yen ($39 billion) for the fiscal year to the end of March.

Ensuring the chip designer is a lean company with attractive growth prospects is key to attracting investors to what is billed as one of the biggest IPOs this year.

Arm Research was started more than 20 years ago, when the company had 200 employees, to delve further into the chip industry beyond the immediate products and applications of the day. In recent years, the division had been studying the use of low power sensors to turn battery-powered energy sources on and off, AI supercomputers that mirrors the human brain and new semiconductor materials and circuits.

“Arm’s focus is on getting products out the door, but not on the long-term, which is why I’ve decided to leave,” said an employee who resigned last year during the reshuffle. “Long-term investments maybe don’t seem like it [as] good in a pre-IPO [profit and loss statement].”

Arm Research had “ended up researching areas that aren’t that relevant to the business,” said a person knowledgeable about the chip designer’s thinking. “Other [research areas] he had no path to the products the company is developing.

Some areas, including machine learning and chip design architecture, have been moved elsewhere within the company. The Materials, Devices and Circuits groups, which have now been disbanded, have been exploring “innovative fundamental technologies, enabling applications that are not yet possible,” says a 2021 Arm Research impact report.

“A key area of ​​interest lies in how we can help evolve future silicon and system design, given the fact that scaling silicon using traditional methods is slowing down,” the report said.

Arm declined to comment.