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If the boss of Arm’s owner Softbank, tells Arm’s CEO to hand over Arm IP to China, what will happen?
There are several reasons why Arm’s CEO will do as he’s told.
The fortune of Softbank’s boss, Masa Son, initiated from a stake in China’s Alibaba and it is said that Alibaba controls the disposal of this stake. Would Son prefer to upset Arm’s CEO or the Chinese authorities?
Furthermore, the Chinese may have a genuine legal right to Arm’s IP.
After Softbank bought Arm, 51% of Arm Technology China was sold to a consortium led by Hou An Innovation Fund of China.
It was widely assumed, because that’s the way China does business, that the deal gave the consortium access to Arm’s IP.
Arm then formed a joint venture with the consortium, with Hou An becoming the controlling shareholder in the jv.
The backers of Hou An are some very heavy hitters – China Investment Corp (China sovereign wealth fund), Temasek (Singapore sovereign wealth fund), Silk Road Fund, Shum Yip Group and Hopu Investments.
It is now being said that the Hou An deal was done precisely because it was foreseen that China could be cut off from Arm technology.
So, even if the Cambridge boys don’t want to give their latest designs to China, Softbank can order them to do so, and even if they still refuse, these hugely wealthy Chinese backers of Hou An can support a lawsuit against Arm to get the IP.
But it won’t come to that. If Softbank orders Cambridge to supply China with its IP there’s nothing Cambridge can do except comply.
And if Arm hands over its IP to Hou An, will Hou An pass it on to Huawei?
It’s a racing certainty.
This is a strategic industry that should never have been sold let alone to an authoritarian communist regime.
Poor huawei. How come the other chinese phone brands isn’t banned like xiaomi?
It looks more like US sabre rattling than anything constructive or focussed. I’m sure “an example” will work wonders for the Trump’s popularity.
I don’t think it’s quite as bad as that Keith, the threat I saw was a China threat not a Huawei threat – it cane from Chen Wen who is China’s chargé d’affaires at their London embassy.
Seems like Huawei is now threatening the UK with “repercussions” if it bans their 5G equipment. Not really the best way to treat your customers.
Actually SEPAM, I thought the dire state of Arm’s finances was due to Masa’s undertaking at the time of the Softbank takeover to double the size of the UK workforce.
It is not obvious how that could reduce their market share:
https://www.electronicsweekly.com/news/business/591889-2019-04/
Rather doubling the work force should, in theory, put ARM front and centre in fields where others are now moving in such as AI.
Or that Arm’s Q2 EBIT fell 99% y-o-y from £82 million in Q2 2017 to £1 million in Q2 2018:
https://www.electronicsweekly.com/news/business/arm-failing-2018-08/
It is particularly the licensing revenue I find rather suspicious.
Is the transfer of IP the real reason ARM’s finances are in dire trouble?
Oh dear, DontAgree, WW3
On a side note:
China is probably looking for a way to retaliate the US for the Huawei ban and the tariffs …
One option reported in the media is withholding rare earths … but that would only work temporarily as those minerals are available elsewhere, just not mined yet.
So what would be a much better option from Chinas point of view ?
I am thinking invading Taiwan!
They have had their eye on their wayward province already for a long time, it would be tremendously hurtful to the US (and the rest of the world) and it would give them access to the most advanced chip technology available … all they need is an excuse …
Taiwan manufactures a large fraction of all chips in the world and an invasion would be a stranglehold on the US and also most of the world in general. Given the current US presidency this would be the start of WWIII.