Arm took away the Chinese division with all the property

The other day occurred an unprecedented event in the history of IT – the Arm China division formally completely disappeared from the control of the former owners. Now it is a new company with its own development plans and intellectual property. The former owners did not receive a cent. It also puts NVIDIA in a very disadvantageous position, which wanted to buy Arm.


Image source: semianalysis.substack.com

Conflict identified himself a little over a year ago. Last July, Allen Wu, director of the Arm China joint venture (JV), was fired from his position by management by seven votes to one. Instead of packing up and leaving, Allen paid for the company’s money and hired security and banned board members and sympathizers from entering the headquarters. According to Chinese law, only those with a seal and statutory documents can manage a company. All these attributes of power remained with Wu, and no one can do anything about it. The highlight is that the Chinese shareholders own 51% of the Arm China JV and are completely on the side of Mr. Wu. Therefore, they tried to resolve the conflict all the time. extrajudicial way.

Arm China was created by the current owner of Arm, the Japanese concern SoftBank, in 2018. A controlling stake in the joint venture was sold to Chinese shareholders for a relatively small amount of $ 775 million. Taking into account the millions of licenses for the eponymous architecture and command system sold per year, this is almost nothing. But money was needed very much.

On the other hand, the creation of the Chinese unit was a preemptive maneuver. At that time, the UK was part of the EU, and Europe was preparing a package of sanctions against China, intending to limit the export of technology. In order not to be left without deductions, it was decided to create a joint venture in China and transfer all rights to licensing Arm developments to local companies.

Allen Wu, appointed director of Arm China, according to Arm’s internal investigation, gave discounts to license buyers if they invested in his own company, Alphatecture. This was called a conflict of interest, and on this basis, Wu was fired. And everything would be fine, and by that time Arm China brought SoftBank up to 30% of the proceeds from the sale of licenses, but Wu refused to leave and continued to trade licenses at his own discretion. At the same time, he regularly paid the required percentage to the parent company and even sued his company Arm China, while remaining its director. In fact, he summoned himself to court.

Now let’s move on to the most important thing. The other day, Allen Wu presented the rebranding of Arm China and spoke about plans for the development of a company that is already completely independent from Arm. The new company does not yet have an English name, but it has a rich set of developments for licensing. All this and much more came from Arm. It is believed that the Chinese got everything at their disposal, up to the Cortex-A77 architecture (development of 2019). The latest Armv9 instruction sets and the entire package of new processors, interfaces and cores were not transferred to China after the conflict began.

In the presentation of the new company, Allen Wu emphasized that it has a lot of new developments that Arm does not have. All this was done by the specialists of the new company. These are neuroprocessors, and accelerators for processing video streams, and network processors, and processors for ensuring the security of computations, and much more. Everything is presented as a family of XPU products.

The new firm is said to have its roots in Arm, but is an independent Chinese company – the country’s largest supplier of chip designs. During its work, it has shipped 20 billion units of products and has over 90 partners. Of this number, 29 partners have reached the stage of mass production of devices using Arm designs. All of this is created by a local team of over 400 people and covers a wide range of products, from mobile applications to web.

It can be assumed that the new company will take over a significant number of Arm customers, although Arm China’s activities may remain under Wu’s rule. The latter is entrusted to sell licenses to Arm, which makes no sense to refuse. And this could destroy the entire scheme of the raider seizure of Arm’s property in China. In addition, this whole design makes NVIDIA’s position on the acquisition of Arm extremely precarious. Without a legal settlement of the conflict, the transaction may not take place.

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