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 Holdings 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 Holdings, 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 license Arm’s IP within China. Within 2 years, the venture went rogue. Recently, they gave a presentation to the industry about rebranding, developing their own IP, and striking their own independently operated path.
This is not the first time the Chinese government – through its companies and investors – has gained access to a large amount of silicon IP (both VIA and AMD fell for this too). Not that I care much for Arm here – they were blinded by greed, and will pay the price – but hopefully this opens the eyes of other companies in similar positions.
I would not call it *greed*, but whatever we name it, is was really unwise.
I fear Tesla would be the next likely victim. If Chinese companies can manage to copy your IP in the *joint* venture, they would likely do so. After all, cloning all the facilities is only 2x the cost.
And if they are not successful this way, they just hack the US databases. When they wanted to learn how to run a large scale healthcare system, they hacked Anthem: https://www.fiercehealthcare.com/payer/officials-say-chinese-hacked-anthem-to-learn-about-u-s-healthcare. When they needed info on COVID vaccines, they targeted Moderna: https://www.reuters.com/article/us-health-coronavirus-moderna-cyber-excl/exclusive-china-backed-hackers-targeted-covid-19-vaccine-firm-moderna-idUSKCN24V38M
I am not sure there is an easy *solution* to this. A modern China is generally accepted as better for everyone involved.
> After all, cloning all the facilities is only 2x the cost.
“First rule in government spending: why build one when you can have two at twice the price?” (Hadden, Contact 1997)
British politics is a mess for all the wrong reasons and Brexit and selling off ARM was all part of it. Blinded by greed? Yes, I would agree with this. None of the owners of ARM needed the money. The Softbank deal should never have gone through and certainly not gone through as arranged but successive governments have been cowed by “free market” idiology and removed any meaningful barriers to government blocking strategically damaging takeovers. The current government is reckless, criminal, and doing everything it can to continue undermining and destablising Europe too so I can understand if other Europeans begin to develop unpleasant views.
I have a lot of sympathy for Finland and what happened to Nokia. I can understand why the UK might not garner similar sympathy. Just bear mind what is happening over here is because of a very well executed coup.
As for China I’m not going to forget what their government did in a hurry.
The Finnish government bent over backwards to please Nokia – too bad it’s always the little guy who gets hurt when power players do their faux nationalism.
Half the time we’re mad at big companies for being exploitative and hurting the consumer, and the other half the time we’re mad at China for competing against the same companies and violating some IP laws that aren’t applicable in that jurisdiction and providing cheap alternative products for consumers. In the west we’re massively benefiting from the sacrifice of the Chinese worker subsidizing our economies all the while we whine and complain about the Chinese competing against western semi-monopolies. I’m getting whiplash. Yes if a Chinese company directly stole (physical?) property from some company (and it is illegal in their jurisdiction) that is bad. But otherwise I call this progress.
It’s true there’s a lot of hyperbole when it comes to china. A lot of people & companies love to use china as a scape goat. We’ve known china’s attitude about “IP” for decades so it’s really hard to sympathize with those who willingly go to china anyways knowing full well their norms are different and then want to pretend they got robbed.
There’s a saying in Texas and probably Tennessee…it says fool me once, same on you. Fool me you can’t get fooled again. 🙂
http://www.youtube.com/watch?v=rQ6N-sb7SVQ
Seriously though there’s only so many times western companies can feign surprise at chinese IP norms and practices before logically concluding that these companies accepted the practices in china and are doing business with them anyways of their own volition because of $$$. So I don’t feel sorry for companies who have made their share holders and executives tons of cash from these offshoring arrangements. It’s the workers who are laid off and/or suffering through bad working conditions who are the real victims of such deals IMHO.
When it comes to things like reverse engineering, my view is that companies need to accept that’s part of competition, if it threatens their monopoly, well good. Many countries permit it and consumers will benefit. On the other hand for things like trademark infringement, that’s really bad in my book because consumers have no idea what they’re buying…counterfeits that try to pass off as authentic are fundamentally dishonest. Consumers deserve to know when what they’re buying isn’t authentic and it’s regrettable china isn’t doing more to stop it. See I don’t necessarily object to chinese manufacturers making cheap knockoffs, there’s clearly huge demand for it with some consumers willing to knowingly buy knockoffs, which is totally ethical as long as they weren’t mislead. Truth in labeling is very important in my book.
The western companies are retarded, they know what happens in China. If they want cheap workers there are some alternatives.
Chinese labour isn’t cheap. Western countries are there because China has the best tooling and manufacturing engineers in the world.
You may be surprised to know that most Swiss watches are actually made in China with some minor assembly in Switzerland to comply with the ‘Swiss Made’ rule.
Brisvegas,
I wholly disagree. The US has lost tooling and manufacturing because western companies dropped it on the grounds that offshore labor is cheaper. Furthermore a big reason China has tooling and manufacturing is because western companies built that up in search of cheap labor.
It wouldn’t surprise me at all actually.
These days we’d be hard pressed to find any domestic products: technology, clothing, parts, it all sourced from countries with cheap labor. If you’re young you may not realize that there was a time when this wasn’t the case and it was normal for everything to be made in the west (for me that was the USA). Businesses increasingly got on the Chinese bandwagon because they saved so much on costs without effecting sales. While there was resentment, consumers were fickle and their shopping preferences clearly demonstrated that they were not willing to pay more for American goods, and so offshoring manufacturers with cheaper products won. When I took some business classes in school, they were telling us that offshoring was the future, and boy they were right.
“Walmart Made In Usa 1990 TV Commercial” (I couldn’t find a copy without the dumb commentary at the end).
https://www.youtube.com/watch?v=6xxjVZrBeHE
PS. It occurs to me that this view may come across as offensive, which is not my intention. I acknowledge that China has lots of talented people and engineers, etc. But so does the west, the big reason China wins even despite the added costs of logistics is the much lower cost of living and labor.
That wasn’t the case in the 70s and the 80s. And there were alternatives to China but I read somewhere that it was an strategy from USA to combat Chinese comunism (a retarded one in my opinion).
Don’t let Nvidia buy them due to “national security” concerns, but do let them host major IP in China that will be stolen. -UK Government.
What about a Chinese takeover of Taiwan affecting TSMC? “China Is Losing Its Bet on Chips”: “An attack on Taiwan, the top manufacturer, would roil industry and the world. [..] making chips is fickle. The formula [..] really in the head of TSMC’s engineers and is tweaked almost daily. [..] forced Taiwan takeover would crater output even if China brought in mainland engineers.”
“[..] I hope TSMC factories are guarded by banks of Patriot missiles. I’d put some of those around ASML’s Dutch facilities too.”
(Andy Kessler, WSJ Nov. 15, 2020)