Beijing-backed server chip startup formed by ex-Arm China execs
(2023/10/12)
- Reference: 1697128574
- News link: https://www.theregister.co.uk/2023/10/12/governmentbacked_server_chip_startup_formed/
- Source link:
China could prove problematic for Arm once more, amid claims key staff from its local subsidiary have left to form a server chip design biz with government backing, and are eyeing up ex-colleagues to help.
Arm China is 49 percent owned by private equity investor Softbank, which still owns most of Arm in the rest of the world following the company's [1]IPO in New York last month.
The remainder of Arm China is owned by a consortium with ties to the Beijing government, and the operation caused headaches for its global parent when it appeared to go rogue under the leadership of former CEO Alan Wu, who was [2]finally ousted last year.
[3]
Now several key ex-employees have started up a chip design outfit with backing from the local government in Shenzhen, and are looking to recruit more engineers from Arm China. The company, Borui Jingxin is said to be an Arm licensee which plans to design processors for servers, according to [4]Bloomberg , which cites sources familiar with the matter.
[5]
[6]
This could spell trouble for Arm in light of the worsening relations between the US and China over trade and technology, especially as Washington is keen to curb Chinese access to compute power.
As the Brit chip designer pointed out in its [7]SEC filing ahead of the IPO , the company is well aware that China poses a risk to its business, particularly if it should be further restricted or even prohibited from selling its intellectual property (IP) in China as a result of the so-called Chip Wars.
[8]
"Our concentration of revenue from the PRC [People's Republic of China} market makes us particularly susceptible to economic and political risks affecting the PRC," the filing reads. Almost a quarter of Arm's total revenue comes via Arm China, which serves as a distribution channel for licensing its IP to local companies.
The highest performance designs in Arm's Neoverse processor line-up already meets or exceeds the performance threshold to be restricted under US and UK export control regimes. If tighter restrictions are brought in, it could further limit what IP Arm can sell.
The Biden administration has been gradually imposing stricter and stricter trade restrictions on the sale of sensitive semiconductor technologies to the Middle Kingdom, with the [9]latest set of updates to the rules under final review.
[10]
Arm and Softbank both declined to comment for this article.
Despite the restrictions, China recently confirmed its intent to build up its compute capacity to exceed 300 exaflops of aggregate compute power within the next two years, which is understood to be a 50 percent increase over the current capacity.
In a posting on WeChat [translated [11]here, six Chinese government departments, including the Ministry of Industry and Information Technology and the Cyberspace Administration of China, issued the "Action Plan for the High-Quality Development of Computing Infrastructure," proposing that compute infrastructure should exceed 300 exaflops by 2025.
IDC's latest analyst predictions indicate that the accelerated server market in China hit $3.1 billion for the first half of 2023, an increase of 54 percent over the same period a year ago, and will grow more than five-fold to reach $16.4 billion by 2027. "Accelerated server" here typically means systems for AI processing fitted with GPUs.
[12]Post-IPO, Arm to push purpose-built almost-processors
[13]Arm reveals just how vulnerable it is to trade war with China
[14]Arm China lays off staff amid chip war and licensing concerns
[15]Arm processor technology caught up in US chip war with China
IDC China AI infrastructure analyst Du Yunlong said the current technical level of China's local chip industry still lags behind that of other countries in the West, but this is gradually changing. Many companies have shifted from "international procurement" to "local procurement" or "self-development and self-use," creating favorable conditions for the development of local chip technology, he said.
Meanwhile, Taiwanese chipmaker TSMC is still said to be waiting to hear if it will be granted an extension to the waiver it currently has that allows it to send US chipmaking equipment to factories it has in China, as its Korean rivals SK hynix and Samsung have.
It was [16]announced this week that the two Korean companies are allowed to continue their chipmaking operations in China indefinitely. It isn't clear if TSMC will be granted the same, or given another one-year extension to its existing waiver. ®
Get our [17]Tech Resources
[1] https://www.theregister.com/2023/09/14/arm_ipo/
[2] https://www.theregister.com/2022/04/29/arm_china_ceo_ousted/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.bloomberg.com/news/articles/2023-10-12/senior-arm-china-staff-quit-to-create-government-backed-startup
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2023/08/23/china_arm_tradewar/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/10/03/us_china_chip_exports/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://mp-weixin-qq-com.translate.goog/s?__biz=MjM5OTUwMTc2OA%3D%3D&mid=2650896493&idx=1&sn=da6b1bd63d6a409d95de4b39249414b9&chksm=bccf52ca8bb8dbdc5beff2055613ed0e5a9df026cbd03443e0a3590ca1c1f59a703d66cd8fb8&mpshare=1&scene=1&srcid=1009RT5eqjYBgQgbJysiGZM5&_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp
[12] https://www.theregister.com/2023/09/15/arm_post_ipo_strategy/
[13] https://www.theregister.com/2023/08/23/china_arm_tradewar/
[14] https://www.theregister.com/2023/02/13/arm_china_lays_off_staff/
[15] https://www.theregister.com/2022/12/14/arm_processor_technology_china/
[16] https://www.theregister.com/2023/10/10/samsung_hynix_sanctions_exemption/
[17] https://whitepapers.theregister.com/
Arm China is 49 percent owned by private equity investor Softbank, which still owns most of Arm in the rest of the world following the company's [1]IPO in New York last month.
The remainder of Arm China is owned by a consortium with ties to the Beijing government, and the operation caused headaches for its global parent when it appeared to go rogue under the leadership of former CEO Alan Wu, who was [2]finally ousted last year.
[3]
Now several key ex-employees have started up a chip design outfit with backing from the local government in Shenzhen, and are looking to recruit more engineers from Arm China. The company, Borui Jingxin is said to be an Arm licensee which plans to design processors for servers, according to [4]Bloomberg , which cites sources familiar with the matter.
[5]
[6]
This could spell trouble for Arm in light of the worsening relations between the US and China over trade and technology, especially as Washington is keen to curb Chinese access to compute power.
As the Brit chip designer pointed out in its [7]SEC filing ahead of the IPO , the company is well aware that China poses a risk to its business, particularly if it should be further restricted or even prohibited from selling its intellectual property (IP) in China as a result of the so-called Chip Wars.
[8]
"Our concentration of revenue from the PRC [People's Republic of China} market makes us particularly susceptible to economic and political risks affecting the PRC," the filing reads. Almost a quarter of Arm's total revenue comes via Arm China, which serves as a distribution channel for licensing its IP to local companies.
The highest performance designs in Arm's Neoverse processor line-up already meets or exceeds the performance threshold to be restricted under US and UK export control regimes. If tighter restrictions are brought in, it could further limit what IP Arm can sell.
The Biden administration has been gradually imposing stricter and stricter trade restrictions on the sale of sensitive semiconductor technologies to the Middle Kingdom, with the [9]latest set of updates to the rules under final review.
[10]
Arm and Softbank both declined to comment for this article.
Despite the restrictions, China recently confirmed its intent to build up its compute capacity to exceed 300 exaflops of aggregate compute power within the next two years, which is understood to be a 50 percent increase over the current capacity.
In a posting on WeChat [translated [11]here, six Chinese government departments, including the Ministry of Industry and Information Technology and the Cyberspace Administration of China, issued the "Action Plan for the High-Quality Development of Computing Infrastructure," proposing that compute infrastructure should exceed 300 exaflops by 2025.
IDC's latest analyst predictions indicate that the accelerated server market in China hit $3.1 billion for the first half of 2023, an increase of 54 percent over the same period a year ago, and will grow more than five-fold to reach $16.4 billion by 2027. "Accelerated server" here typically means systems for AI processing fitted with GPUs.
[12]Post-IPO, Arm to push purpose-built almost-processors
[13]Arm reveals just how vulnerable it is to trade war with China
[14]Arm China lays off staff amid chip war and licensing concerns
[15]Arm processor technology caught up in US chip war with China
IDC China AI infrastructure analyst Du Yunlong said the current technical level of China's local chip industry still lags behind that of other countries in the West, but this is gradually changing. Many companies have shifted from "international procurement" to "local procurement" or "self-development and self-use," creating favorable conditions for the development of local chip technology, he said.
Meanwhile, Taiwanese chipmaker TSMC is still said to be waiting to hear if it will be granted an extension to the waiver it currently has that allows it to send US chipmaking equipment to factories it has in China, as its Korean rivals SK hynix and Samsung have.
It was [16]announced this week that the two Korean companies are allowed to continue their chipmaking operations in China indefinitely. It isn't clear if TSMC will be granted the same, or given another one-year extension to its existing waiver. ®
Get our [17]Tech Resources
[1] https://www.theregister.com/2023/09/14/arm_ipo/
[2] https://www.theregister.com/2022/04/29/arm_china_ceo_ousted/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.bloomberg.com/news/articles/2023-10-12/senior-arm-china-staff-quit-to-create-government-backed-startup
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2023/08/23/china_arm_tradewar/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/10/03/us_china_chip_exports/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZShsgxKgKzxzI0iR0ak6EAAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://mp-weixin-qq-com.translate.goog/s?__biz=MjM5OTUwMTc2OA%3D%3D&mid=2650896493&idx=1&sn=da6b1bd63d6a409d95de4b39249414b9&chksm=bccf52ca8bb8dbdc5beff2055613ed0e5a9df026cbd03443e0a3590ca1c1f59a703d66cd8fb8&mpshare=1&scene=1&srcid=1009RT5eqjYBgQgbJysiGZM5&_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp
[12] https://www.theregister.com/2023/09/15/arm_post_ipo_strategy/
[13] https://www.theregister.com/2023/08/23/china_arm_tradewar/
[14] https://www.theregister.com/2023/02/13/arm_china_lays_off_staff/
[15] https://www.theregister.com/2022/12/14/arm_processor_technology_china/
[16] https://www.theregister.com/2023/10/10/samsung_hynix_sanctions_exemption/
[17] https://whitepapers.theregister.com/
Here we go again...
Anonymous Coward
The usual refrain: "Sanctions are hurting the sanctioner more than the sanctioned".
We've heard that for Cuba, Venezuela, Iran, North Korea, and now... Russia and China.
I wonder why I'm a bit skeptical... and whether there could be some disingenuous agenda behind such a theory. Really, I'm wondering.
It's an, um... arm race
Anonymous Coward
Predictably, we're going to be served the usual soup of "sanctions-are-the-best-way-to-make-sure-China-will-catch-up-and-overtake-the-West" stories.
Granted, China will have no other solution than to build their own semi-conductor industry.
But honestly...
1. Where they not doing that already? With very little success, one has to admit.
2. Does anybody believe that free countries will stay idle and wait for China to catch up? And then marvel at the miracle? Surely not! Some of the brightest brains, supported by powerful investments are at work, across all the many disciplines involved in the semiconductor industry. Something to reckon with.
3. Improving feature size is a dead end already. Optoelectronics is the new game. In this domain, front runners mostly dwell East of the Pacific.
The pattern is: people take measures to solve their problems. Till they're faced with more problems, and then, they take measures again.
That's why we still develop drugs and vaccines against pathogens. Granted, pathogens evolve mechanically to escape these drugs as well as our anticipated immune system responses, but, in the meantime, we develop new drugs and new vaccines, tailored to the evolved strains. It's an arm race, it has always been one.
Sorry for having to state the obvious, but addressing issues is more beneficial than ignoring them.
Honestly, I'm not sure what Biden expected to happen but what is playing out now in China is exactly what anyone with a few brain cells to rub together would have guessed.
It was easier for Chinese companies to import from the west, but with supply cut off, they are going to rapidly grow their own capability and sell it back to us. They were starting to do that already. These actions are just accelerating the process.