A mind-boggling story is unfolding of how one of the world's leading semiconductor design and IP (intellectual property) firms set up a Chinese subsidiary, only to have the boss of the subsidiary "go rogue", take it over, and run it as a Chinese company for his own and that country's benefit, without so much as a "by your leave".
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.
. . .
Despite formally being fired, Allen Wu has remained in power. He ousted executives that were loyal to Arm. He has even hired security paid for by Arm China that reports to him. This security has kept Arm out of the Arm China offices. Allen Wu has aggressively taken over the firm and is operating it how he sees fit. One interesting tidbit is that Allen Wu sued Arm China in order to declare his dismissal illegal. He essentially sued himself as he represented both sides in that specific court case.
. . .
Arm has been shaken to its core with the 2nd largest market snatched from underneath it. According to Arm, no IP has been stolen, but Arm cannot license directly license to any firm in China. They must go through 安谋科技.
Only the rogue Arm China entity controlled by Allen Wu can create agreements for licensing Arm IP in china. While Arm is the largest individual owner in this firm, they have no control or power over the operations.
There's more at the link.
Tell me again . . . why would any Western company subject itself to this sort of risk in order to do business in or with China? I know many will say that if you want to have access to what's rapidly becoming the world's biggest market, you don't have any choice: but if you know the risk of being robbed blind like this is far from paltry, you'd better figure out whether such access is worth it.
It might also be worth asking whether it's in any nation's interest to allow Chinese firms to buy local companies and strip-mine them of their intellectual property - their designs, technical knowledge and everything that makes them attractive to investors in the first place. Once that's gone, all that will be left is an empty shell, which the new Chinese owners can choose to run into the ground if they wish. The innovation and technical superiority that made the company what it is will have disappeared.
Fundamental dishonesty on open display. That says it all.