After NVIDIA, a US GPU giant, failed to acquire arm, Qualcomm, another US chip giant that once opposed the acquisition, began to "get ready" and showed strong interest in acquiring arm. However, after seeing the antitrust obstacles in the acquisition process of NVIDIA, Qualcomm put forward a new idea - Group acquisition with other companies to maintain arm's independence in the industry.
In fact, the US chip giant Intel also proposed the idea of Group acquisition of arm before.
It is worth noting that although this move can realize that arm is not dominated by one company, if the acquirers are all American enterprises, it will still lead to the situation that the United States dominates both x86 and arm architectures, which is undoubtedly a potential threat to the development of related chips in other countries, including China.
Moreover, Softbank group, the parent company of arm, may not have time to talk about acquisition in the near future.
According to Qualcomm CEO anmeng, Softbank has been giving priority to resolving the internal disputes of its Chinese joint venture anmou China recently. The dispute over the removal of the former chairman by the board of directors has lasted for two years. Recently, wuxiongang, the former chairman of anmou China, was forcibly removed, and two co CEOs took over the management right of anmou China. Some foreign media pointed out that this was to clear the audit obstacles of arm's listing in the United States.
This statement was confirmed by Softbank. In mid May, sonzhengyi, CEO of Softbank group, revealed that one of the biggest obstacles to arm's listing was the governance of Chinese joint ventures. At that time, he mentioned that anmou China had completed the industrial and commercial changes, and wuxiongang was out. As anmou China entered the normal management, Softbank will conduct a thorough audit of anmou China in the future, clearing the obstacles for arm's listing.
Screenshot of Financial Times report
Qualcomm wants to form a group to acquire arm
After NVIDIA gave up its US $66billion acquisition of arm in February this year, Softbank plans to list arm on the New York Stock Exchange. However, considering the importance of arm in the global technology industry, the IPO still attracted attention from all walks of life to the future ownership of arm.
On May 31 local time, the Financial Times quoted Cristiano Amon, CEO of Qualcomm, as saying that the company was very interested in investing in arm. "This is a very important asset and is crucial to the development of our industry.".
In the process of NVIDIA's acquisition of arm, before China made a formal statement, European and American regulators voiced doubts about the acquisition one after another, and NVIDIA finally "backed away from difficulties". Perhaps with this in mind, anmeng added in the interview that the company may join hands with other chip companies to acquire arm, "you need to have a lot of companies involved to create the effect of arm's independence".
Arm is a technology company based in Cambridge, England. The company does not directly design and produce chips, but the instruction set architecture provided by the company is Apple , Qualcomm, Huawei, MediaTek and other companies are the basis for chip design. According to the data released by strategy analytics, a market research agency, in 2020, chips based on ARM architecture accounted for 100% and 89% of the smart phone and tablet computer application processor market respectively.
This is also the main reason why European and American regulators oppose NVIDIA's separate acquisition of arm. As a company with arm business layout, if NVIDIA fully controls arm, it will be difficult to ensure arm's neutrality in the industry in the future.
Not only the mobile terminal, but also the hot track intelligent car is the direction of arm's continuous development. At the performance conference in mid May, arm revealed that thanks to the demand for automotive electrification and improved computing capacity, the company's IP licensing business achieved a revenue of more than US $1billion for the first time last year, the best performance in history. In 2021, the chip shipments based on ARM architecture technology reached 29.2 billion, and the historical cumulative shipments exceeded 225 billion.
In 2016, Softbank group purchased all the shares of arm with us $32billion. According to the financial report, arm achieved a revenue of $2.7 billion in 2021, a year-on-year increase of 35%, and the adjusted EBITDA (profit before tax, interest, depreciation and amortization) increased by 68% year-on-year to $1billion, with an adjusted EBITDA margin of 37%.
Although arm has long belonged to Japan Softbank group, its headquarters have not moved out of the UK. Therefore, in the view of some British politicians, arm is still the key strategic asset of the UK. After the failure of NVIDIA's acquisition, some British politicians called on the government to acquire arm's "golden share".
The latest proposal of the CEO of Qualcomm adds more uncertainty to the ownership of arm in the future. In fact, the US CPU giant Intel has already expressed similar ideas. The CEO of the company said earlier this year that he supported the Group acquisition of arm.
Qualcomm has clearly opposed NVIDIA's acquisition of arm, saying that it is meaningless for a chip company to control a company that is very important to the entire industry. "Due to the collective investment of the entire ecosystem, such as apple, Qualcomm and other companies, arm has won in various fields because it is an independent and open architecture, and everyone can invest," said anmeng, referring to the period before Softbank acquired arm.
Chip products based on arm (data figure)
After two years of upward cycle, the semiconductor industry seems to be ushering in a turning point. Some people believe that the chip industry is about to have oversupply, while others believe that there is still a structural shortage. The Financial Times reported that the global demand for semiconductors will double in the next 10 years, and all manufacturers of modern electronic products will rely more on ARM products than ever before.
"I think today's trend is that everything is shifting to arm," anmeng said in an interview. Arm is currently committed to expanding from the mobile phone field to automobiles, the Internet of things and data centers. He believes that investing in arm with competitors will "support the successful IPO and valuation" and ensure that arm continues its "efforts and investment".
At present, Qualcomm is not only relying on arm for mobile phone chips, but also expanding the layout of other arm based products. The company has disclosed that it will launch a new arm based notebook processor in 2023, aiming to compete with Apple's M-series notebook processor, while Apple's M1 series processor based on arm has been "beating" Intel's flagship product.
The case of customers' investment in suppliers' equity is not unknown in the semiconductor industry. The most famous case should be the case of TSMC, Intel and Samsung jointly investing in ASMA, a Dutch lithography giant. At present, these three companies are also major customers of ASMA's EUV lithography machine.
As a major customer of arm, if Qualcomm can successfully invest in arm, it will be good for Qualcomm in terms of technical cooperation and priority supply. However, this move will undoubtedly arouse the vigilance of other competitors, especially if arm is completely controlled by American companies and subject to American supervision, it will pose a potential threat to Chinese companies using ARM technology, and its impact should be no less than arm's acquisition by NVIDIA.
However, anmeng also disclosed that it has not communicated with Softbank about the investment in arm, because Softbank has been busy solving the "rebellion" problem of its Chinese joint venture recently.
Sun Zhengyi said he would "thoroughly audit" China
Since 2022, especially after NVIDIA gave up the acquisition of arm, the internal disputes of arm China have been stirring up. The company's predecessor was arm's distribution business in China.
In april2018, Softbank signed a contract with a group of Chinese investors to establish anmou China. China holds 51% of the shares and arm holds 49%. Wuxiongang, who has worked in arm China for many years, serves as the chairman of the new company.
Wu xiongang's source: Financial Times
The newly established anmou China can not only exclusively sell arm's IP products in China, but also independently develop and re authorize based on arm's technical architecture. In 2019, the revenue of anmou China increased by 50% year-on-year.
But everything that seemed calm was broken in 2020. In June of that year, arm, together with Hopu investment, the Chinese party acting in concert (reportedly holding 36% of the shares), announced that the board of directors of anmou China had dismissed Wu xiongang on the grounds that Wu xiongang's behavior harmed the development of the company and the interests of shareholders.
Wu xiongang refused to accept the dismissal because the dismissal procedure was improper and he did not attend the board of directors to dismiss him (Wu xiongang was said to indirectly control 15% of the shares of anmou China).
Since then, as Wu xiongang held the official seal and business license of anmou China, the two major shareholders did not realize the substantive dismissal of Wu xiongang.
With the announcement of NVIDIA's acquisition of arm in September, 2020, the recall issue began to be dealt with coldly by arm. Wu xiongang also continued to attend various public activities as the chairman of anmou China.
However, after the failure of NVIDIA's acquisition, the recall caused huge waves again. At the end of April this year, when wuxiongang controlled the official seal and business license, anmou China completed the change of legal representative in Shenzhen and announced the new official seal and business license.
According to the information spread by Softbank, at present, liurenchen and Chen Xun are the co CEOs of anmou China, and wuxiongang no longer holds any positions.
According to the resume information, liurenchen graduated from the Department of chemical engineering of Tsinghua University and is now the vice president of the Research Institute of Tsinghua University in Shenzhen; Chen Xun, who studied at Peking University and Stanford University, is now the managing partner of Softbank vision fund and is responsible for handling Softbank vision fund's affairs in China.
Screenshot of resume information of liurenchen and Chen Xun
At present, the official voice channel of anmou China has been mastered by the new management. On May 19, the official wechat of anmou China said that the new co chief executives liurenchen and Chen Xun had taken over the commercial operation of anmou China.
As for why Softbank and Hopu investment had to dismiss Wu xiongang, some foreign media mentioned that under Wu xiongang's obstruction, the financial affairs of anmou China could not be audited, which became a major obstacle to arm's listing in the United States and an incentive for the recall storm to break out again after the failure of NVIDIA's acquisition.
Softbank, which suffered huge losses last year, is eager for arm to become its future growth point.
According to the financial report, Softbank's sales revenue in 2021 was $48.5 billion, a year-on-year increase of 10.5%, but its loss reached $15.1 billion, the highest since the company was founded. After NVIDIA gave up the acquisition, it became a top priority for Softbank to promote arm's listing and relieve its financial pressure.
Wu xiongang's statement of obstructing financial auditing was also confirmed by sun Zhengyi a few days ago.
When releasing the results on May 14, sun Zhengyi mentioned that one of the biggest obstacles to arm's listing was the governance of Chinese joint ventures, "The person in charge of anmou China (wuxiongang) is a little rebellious. Two years ago, the board of directors dismissed him, but Wu is still in charge of the business. It is not easy to change. But last week, especially this week, great progress has been made. Two new CEOs have been formally decided by the board of directors, and one of them has been approved by China, completing the industrial and commercial change registration (obtaining a new official seal), which has made great progress."
Son Zhengyi also said that as anmou China has stepped into normal management, Softbank will conduct a thorough audit of anmou China in the future, clearing the obstacles for arm's listing.
When disclosing the performance, Ren Haas, chief executive officer of arm, disclosed that after Wu xiongang, the former CEO of Amway China, was dismissed and obtained the financial data, Amway China's joint venture accounted for about 20% of arm's total global revenue in 2021, with a total amount of about $540million. "I can say that without the performance of Chinese joint ventures, arm would not have achieved such good results last year."
But Wu Hsiung ang, who was forcibly dismissed, did not seem willing to accept this fact. Recently, some media quoted insiders as saying that Wu xiongang was resolving the matter through administrative reconsideration and other legal means in response to the "unilateral" dismissal of the board of directors, and he would not compromise on it for the time being.
After the emergence of the new management of anmou China, Wu xiongang issued a joint letter of 430 anmou China employees.
The letter mentioned that "Softbank, as a large western capital consortium, has repeatedly violated its commitment to the Chinese market, dismissed the company's management in order to recover the joint venture, and wants to turn the independent joint venture into a fully controlled subsidiary to serve its own financial interests. This behavior not only ignores the agreements and commitments made at the beginning of the establishment of the company, but also inevitably damages the interests of Chinese shareholders and all employees."
As for why the Chinese party acting in concert Hopu investment stood by arm, Wu xiongang disclosed through the media on April 29 that the initial goal of Hopu investment in anmou China was to get a return in the short term after listing. However, the listing of anmou in China is temporarily blocked, which means that Hopu investment cannot withdraw and realize as scheduled. At this time, if arm promises to let Magnolia officinalis exit in other ways, Magnolia officinalis' violation of the agreement of persons acting in concert becomes reasonable.
After the battle broke out again, some media came out to speak for Wu xiongang and questioned that Softbank wanted to turn the joint venture that could be independently developed into arm's distribution channel in China again.
However, after taking office, the new management of anmou China announced that it would maintain the independent operation of anmou China as a company with a majority stake held by Chinese investors. Anmou China would also remain the exclusive commercial distribution channel for arm to provide IP authorization to Chinese companies, and the company would continue to develop its own IP.