ARM to close DSP-development office

ARM Holdings is to close its Belgian office where some of its digital signal processing (DSP) technology was developed, laying off around 20 staff, and indicated that it will, over time, shed some of its physical IP development team in a bid to bring the group to profitability.

During a conference call to discuss earnings for the third quarter of 2009, CEO Warren East, said it “was a good quarter for ARM”, claiming that the company had outperformed the semiconductor industry over the past nine months and gained market share in IP. Although sales fell from 2008 levels, the company did somewhat better than semiconductor suppliers which saw massive falls in sales during the first two quarters of the year.

For the first nine months of the year, ARM’s dollar revenues dropped by 12 per cent to just under $350m. The decline in the third quarter, compared to 2008, was 8 per cent to $123m. Thanks to exchange rate changes, revenue in pounds increased 5 per cent to £75.2m, providing profit before tax of £24.3m.

East claimed the decision to shut the office in Leuven was to remove a small operation which, compared to the company’s major development centres in Cambridge, France and the US, is comparably inefficient to operate. The company took on the office when it bought part of Adelante Technologies, a Philips spin-out, in 2003, taking on 25 staff. The group was responsible for developing the Optimode configurable-DSP core which was licensed earlier in the decade by LG Electronics, hearing-aid maker Phonak and Toshiba.

Although East claimed the normal process is to transfer technology and development to its main development centres, the closure of the Leuven office will result in the layoff of 24 staff.

To bring the physical IP group closer to profitability, acquired when the company bought Artisan, East said the aim is to reduce the size of the development team over time. He claimed that the high-spending “catch-up” phase was coming to an end, having pushed hard to develop libraries for leading-edge nodes such as the 32nm and 28nm processes being introduced now by Common Platform and TSMC.

East said: “Over multiple quarters a gradual modest decline in headcount that will accompany increased revenue, so you will see increased margin over time.

CFO Tim Score added: “We are now moving into an environment where we can develop technology at a steady state.”

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