The Semi-conductor heist of the century

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https://semianalysis.substack.com/p/the ... he-century

The Semiconductor Heist Of The Century | Arm China Has Gone Completely Rogue, Operating As An Independent Company With Inhouse IP/R&D

Arm is widely regarded as the most important semiconductor IP firm. Their IP ships in billions of new chips every year from phones, cars, microcontrollers, Amazon servers, and even Intel's latest IPU. Originally it was a British owned and headquartered company, but SoftBank acquired the firm in 2016. They proceeded to plow money into Arm Limited to develop deep pushes into the internet of things, automotive, and server. Part of their push was also to go hard into China and become the dominant CPU supplier in all segments of the market.

As part of the emphasis on the Chinese market, SoftBank succumbed to pressure and formed a joint venture. In the new joint venture, Arm Limited, the SoftBank subsidiary sold a 51% stake of the company to a consortium of Chinese investors for paltry $775M. This venture has the exclusive right to distribute Arm’s IP within China. Within 2 years, the venture went rogue. Technically it has always been legally independent, but Arm still maintained control. Recently, Arm China gave a presentation to the industry about rebranding their own IP, extending it by developing more, and emphasizing that they are striking their own independently operated path.

This firm is called “安谋科技”, but it is not part of Arm Limited.

This is the tech heist of the century.

Before we get to the event they held and the significance of it, let’s do a recap. In 2020, Arm and a handful of the investors agreed to oust Allen Wu, the CEO of Arm China. He was ousted for using his position as the CEO of Arm to attract investments in his own firm, Alphatecture.

Removing Allen Wu has proven to be very difficult. Despite a 7-1 vote by the Arm China board, the company seal was still held by Allen Wu. In China, the seal/chop is a stamp which authorizes the person in possession to bind a company and its representatives with rights and obligations. Retrieving this seal and the business license would be a multiyear drawn-out legal process. Furthermore, it would mean at least some investors besides Arm must be along for the ride. Currently other investors still agree with ousting Allen Wu. The Chinese court system would also need to agree with ousting an executive in favor of one that was hand selected by western influencers.

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