ARM China Seizes IP, Relaunches as an ‘Independent’ Company

The onetime CEO of ARM China, Allen Wu, has reportedly seized control of ARM’s Chinese business venture, ARM China. Mr. Wu is accused of attempting to launch his own company, Alphatecture, by leveraging his position at ARM China to do so. Companies were reportedly offered discounts on ARM China products if they would invest in Alphatecture. Investors and ARM agreed to oust Wu for this behavior in a board vote, 7-1, but Wu still possessed the seal of the company, which makes him its legal representative as far as Chinese law is concerned.

Wu hired security to keep ARM employees from entering ARM China, fired employees who did not wish him to take over the company, and has sued ARM China to declare his own dismissal as CEO illegal. This means Allen Wu (person) is suing Allen Wu (ARM China). As Devin Patel reports, ARM has responded by refusing to transfer any IP from its new products. The newest CPU core ARM China has access to is the Cortex-A77.

Wu has responded in turn by holding an event declaring that 安谋科技 (this appears to mean ARM Limited) is an enormous success, and that it would soon ship a new “XPU” line of products consisting of AI accelerators and processing units, image signal processors, security processors, and video processors. Most of this equipment is targeting the IoT market.

Patel claims that Softbank’s “short-sighted profit-driven behavior” is at the root of this problem. In 2018, Softbank agreed to cede control of ARM’s Chinese operations to the ARM China joint venture. ARM/Softbank owns 49 percent of the company while the Chinese own 51 percent. The Chinese government’s goal for the merger, according to Nikkei Asia, was “[T]o secure sources of technology, especially for some sensitive chips that later go into government or other security uses,” an anonymous chip executive stated. “China does not need to worry whether other countries like the U.S. could somehow pressure Arm to provide less support for Chinese companies.” This Asia Nikkei story goes into detail on how SoftBank’s agreement left it with very little control.

It is not clear how much pressure was put on SoftBank to form the merger, but this looks like one of the most blatant examples of IP theft that we’ve seen. The Chinese arm of a company has gone rogue and refused to obey the ruling of its own board. The head of that company is essentially treating it as a personal fiefdom, and Chinese authorities do not appear to have taken meaningful action to reign in Mr. Wu. While ARM China does not currently have access to the ARMv9 instruction set or any additional ARM IP, it appears that the company will attempt to use previously transferred assets to bootstrap its own transformation into an “independent” company.

Nvidia may or may not be able to come to some kind of agreement with the renegade corporate entity as part of its effort to buy ARM, but that effort will need to clear EU scrutiny before Nvidia gets involved in any conversation. The EU has recently said it will investigate the ARM-Nvidia marger. Nvidia has said it will work “with the European Commission to address any concerns they may have.” ARM had no comment on this story.