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The ARM architecture, developed by semiconductor IP company ARM, is being used in billions of chips used in smartphones, automobiles, microcontrollers, and AWS servers. ARM is a British company, but it was acquired by Softbank in 2016 and later announced its sale to Nvidia. However, a Chinese joint venture that had license rights in their country unilaterally declared independence and blocked intellectual property license rights.
In June 2018, SoftBank sold a 51% stake in ARM Technology, a Chinese subsidiary with the purpose of conducting ARM IP business in China, to a Chinese investment consortium to form a joint venture with ARM China. ARM China has the exclusive right to manage ARM IP licenses in China.
However, it was later discovered that ARM China CEO Allen Wu had offered ARM China customers a license fee discount and was attracting investment in his company in return. In 2020, ARM and shareholders agreed to expel CEO Allen Wu, and the board of directors voted 7 in favor, 1 against, and dismissed the CEO, citing conflicts of interest.
However, because the seal was held by CEO Allen Wu, the dismissal could not be carried out legally. In China, seals are legally effective, so various procedures in the company can only be implemented with a seal. In other words, even though the board of directors decided to dismiss CEO Allen Wu, the CEO refused to dismiss him, leaving the company in de facto control.
CEO Allen Wu expelled a senior executive attached to ARM from the board of directors and sued the board in the name of ARM China. As the influence of ARM has been excluded, ARM China is completely out of the hands of ARM.
Of course, ARM did not sit still and took retaliation by suspending the new IP license agreement. For example, major technologies such as the ARM CPU Cortex-A77 and AWS’s own designs of Graviton and Neoverse series were not transferred to ARM China. Also, Armv9, a new architecture announced in May 2021, was not provided to ARM China. Moreover, ARM is appealing to the Chinese government, saying that ARM China has a bad influence on the Chinese semiconductor industry.
In response to the new license suspension, ARM China held an event to officially declare independence from ARM and appealed to ARM China as China’s largest semiconductor IP supplier. In addition, ARM China announced a new IP called the XPU line developed independently. In addition, it announced that it would release its own NPU and VPU for mobile devices such as smartphones and IoT devices in the future.
As a result, ARM China is a form of claiming independence from ARM, stealing some ARM’s IP and occupying the world’s second largest market in China. ARM China is the most famous example of a Chinese joint venture that just came out. Although IP has been stolen and copied in China for decades, this ARM China incident may be the most daring attempt so far. Also, although it is not known how this Arm China explosion will affect the acquisition of Nvidia, it is also pointed out that SoftBank’s short-sighted pursuit of profits has caused such a large-scale problem. Related information can be found here.
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