Arm dismisses suggestion its Chinese JV has staged a 'heist'
(2021/09/02)
- Reference: 1630565945
- News link: https://www.theregister.co.uk/2021/09/02/arm_ltd_arm_china/
- Source link:
Arm Ltd has dismissed an analyst's opinion that its Chinese joint venture has conducted a "heist" that has damaged the chip design firm's prospects in China.
The heist allegation appeared in a [1]post by Dylan Patel, chief analyst at an outfit named SemiAnalysis. The post is titled "The Semiconductor Heist Of The Century | Arm China Has Gone Completely Rogue, Operating As An Independent Company With Inhouse IP/R&D".
The post revisits the odd situation at Arm China – known locally as An MouTechnology – which in June 2020 [2]fired CEO Allen Wu .
[3]
Wu refused to leave his post.
[4]
[5]
Arm Ltd, the UK-based and currently-Softbank-owned chip designer, is a minority shareholder in Arm China. While it has representation on Arm China's board and wants Wu gone, being a minority shareholder means it can't make that happen.
Wu retains Arm China's company chop — an item akin to a company's official seal. Under Chinese law, possessing the chop gives Wu authority over the company regardless of the Board's intentions. Transferring possession of a chop is not straightforward so even though he's not wanted, Wu remains in charge. Lawsuits about the matter are currently percolating through the courts.
[6]
Arm Ltd is not happy that Wu remains in charge and continues to engage with China's government to explore a resolution.
Despite being under a cloud, Wu has been busy. Arm China has recently announced what it calls a "two-wheel drive A+X strategy" that will see it continue to promote and localise Arm designs and strike out to create its own designs.
[7]Chinese chip designers hope to topple Arm's Cortex-A76 with XiangShan RISC-V design
[8]Tencent to put AI to work exploring space – not ways to extend its monopolies
[9]EU to formally probe Nvidia's $54bn takeover over British chip designer Arm – report
Patel suggests that's the "heist" because Arm China going beyond its intended activities shows Arm Ltd has lost control. And once Arm China has its own tech it could place less emphasis on Arm Ltd tech and therefore send fewer payments back to HQ.
Fair, but also, Arm China control has been taken away. Arm cannot operate in China without Arm China. That's a hiest. — Dylan Patel (@dylan522p) [10]September 2, 2021
Arm Ltd is unworried. In conversation with The Register , company representatives said that the company is happy with the results produced by Arm China and sees nothing to worry about in the joint venture's new strategy. On the record, Arm Ltd offered the following statement:
Arm continues to have a successful working relationship with the Arm China team in support of this growth, and both the structure and ownership of the JV remains unchanged since its inception in 2018.
Arm has seen strong growth in our business as our global partners shipped more than 25 billion Arm-based chips in 2020. Of those 25 billion chips, more than three billion were shipped by our partners based in China.
Another reason the "heist" interpretation is hard to sustain is Softbank's [11]2018 announcement of the Arm China joint venture, which states "Arm believes this joint venture, which will license Arm semiconductor technology to Chinese companies and locally develop Arm technology in China, will expand Arm's opportunities in the Chinese market."
That Arm China is now seeking to create a new line of business, while explicitly stating that it continues to work with Arm designs, appears not to suggest a "heist" has taken place.
Even if Arm China were to back away from Arm designs, it would be doing itself a disservice. The Arm ecosystem is enormous, and device-makers and developers would be loath to step away from it to learn the intricacies of a new player with small market share. Dumping Arm would also deprive Chinese licensees of the export opportunities generated by global demand for Arm's tech.
[12]
China's desire to achieve greater technological self-sufficiency could conceivably accelerate local adoption of a new made-in-China platform by fiat — but such a decision would also stymie the Middle Kingdom's ambition of putting big data analytics sand 5G networks at the heart of its economy in the next five years. ®
Get our [13]Tech Resources
[1] https://semianalysis.substack.com/p/the-semiconductor-heist-of-the-century
[2] https://www.theregister.com/2020/06/12/arm_boardroom_battle/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2021/07/06/xiangshan_risc_v/
[8] https://www.theregister.com/2021/07/09/tencent_space_research/
[9] https://www.theregister.com/2021/08/27/nvidia_arm_eu_probe_report/
[10] https://twitter.com/dylan522p/status/1433237383932227588?ref_src=twsrc%5Etfw
[11] https://group.softbank/en/news/press/20180605
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://whitepapers.theregister.com/
The heist allegation appeared in a [1]post by Dylan Patel, chief analyst at an outfit named SemiAnalysis. The post is titled "The Semiconductor Heist Of The Century | Arm China Has Gone Completely Rogue, Operating As An Independent Company With Inhouse IP/R&D".
The post revisits the odd situation at Arm China – known locally as An MouTechnology – which in June 2020 [2]fired CEO Allen Wu .
[3]
Wu refused to leave his post.
[4]
[5]
Arm Ltd, the UK-based and currently-Softbank-owned chip designer, is a minority shareholder in Arm China. While it has representation on Arm China's board and wants Wu gone, being a minority shareholder means it can't make that happen.
Wu retains Arm China's company chop — an item akin to a company's official seal. Under Chinese law, possessing the chop gives Wu authority over the company regardless of the Board's intentions. Transferring possession of a chop is not straightforward so even though he's not wanted, Wu remains in charge. Lawsuits about the matter are currently percolating through the courts.
[6]
Arm Ltd is not happy that Wu remains in charge and continues to engage with China's government to explore a resolution.
Despite being under a cloud, Wu has been busy. Arm China has recently announced what it calls a "two-wheel drive A+X strategy" that will see it continue to promote and localise Arm designs and strike out to create its own designs.
[7]Chinese chip designers hope to topple Arm's Cortex-A76 with XiangShan RISC-V design
[8]Tencent to put AI to work exploring space – not ways to extend its monopolies
[9]EU to formally probe Nvidia's $54bn takeover over British chip designer Arm – report
Patel suggests that's the "heist" because Arm China going beyond its intended activities shows Arm Ltd has lost control. And once Arm China has its own tech it could place less emphasis on Arm Ltd tech and therefore send fewer payments back to HQ.
Fair, but also, Arm China control has been taken away. Arm cannot operate in China without Arm China. That's a hiest. — Dylan Patel (@dylan522p) [10]September 2, 2021
Arm Ltd is unworried. In conversation with The Register , company representatives said that the company is happy with the results produced by Arm China and sees nothing to worry about in the joint venture's new strategy. On the record, Arm Ltd offered the following statement:
Arm continues to have a successful working relationship with the Arm China team in support of this growth, and both the structure and ownership of the JV remains unchanged since its inception in 2018.
Arm has seen strong growth in our business as our global partners shipped more than 25 billion Arm-based chips in 2020. Of those 25 billion chips, more than three billion were shipped by our partners based in China.
Another reason the "heist" interpretation is hard to sustain is Softbank's [11]2018 announcement of the Arm China joint venture, which states "Arm believes this joint venture, which will license Arm semiconductor technology to Chinese companies and locally develop Arm technology in China, will expand Arm's opportunities in the Chinese market."
That Arm China is now seeking to create a new line of business, while explicitly stating that it continues to work with Arm designs, appears not to suggest a "heist" has taken place.
Even if Arm China were to back away from Arm designs, it would be doing itself a disservice. The Arm ecosystem is enormous, and device-makers and developers would be loath to step away from it to learn the intricacies of a new player with small market share. Dumping Arm would also deprive Chinese licensees of the export opportunities generated by global demand for Arm's tech.
[12]
China's desire to achieve greater technological self-sufficiency could conceivably accelerate local adoption of a new made-in-China platform by fiat — but such a decision would also stymie the Middle Kingdom's ambition of putting big data analytics sand 5G networks at the heart of its economy in the next five years. ®
Get our [13]Tech Resources
[1] https://semianalysis.substack.com/p/the-semiconductor-heist-of-the-century
[2] https://www.theregister.com/2020/06/12/arm_boardroom_battle/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2021/07/06/xiangshan_risc_v/
[8] https://www.theregister.com/2021/07/09/tencent_space_research/
[9] https://www.theregister.com/2021/08/27/nvidia_arm_eu_probe_report/
[10] https://twitter.com/dylan522p/status/1433237383932227588?ref_src=twsrc%5Etfw
[11] https://group.softbank/en/news/press/20180605
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YTCg5swLkH@sjgTQapqkjwAAARE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://whitepapers.theregister.com/
About those analysts...
Martin-R
Always fascinates me how headlines talk of "results miss analysts expectations" rather than "company announces results; analysts get predictions wrong again"
0wn3d
elsergiovolador
Article 7: All organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with law, and shall protect national intelligence work secrets they are aware of.
As per China's National Security Law.
A RAT does as a Remote Access Trojan and Renegade Rogue and Wannabe Hostile Agency does
amanfromMars 1
Dylan Patel's analysis may very well be crooked, and even wilfully designed and intended to be wantonly mischievous and political subversive.
Such certainly doesn't do the SemiAnalysis business any great favours if even one of its analysts are found to be concluding matters wrongly and sharing those opinions widely in the company's name.
Arm Ltd's statement on the matter clearly dismisses and discredits the concerns raised by DP's analysis.
Arm Ltd has dismissed an analyst's opinion
Well, they're hardly going to say " Yep we got mugged off, and now a Chinese company we have no control over has our designs. ".