The recent history of Arm, the Cambridge-based chip designer, has been full of twists. FTSE-listed until owner SoftBank took it private in 2016, the latest news relates to its nearly two-year struggle with its own joint venture in China.
The renegade Arm China, led by Allen Wu, is denying the company the ability to audit its finances — a major hurdle in SoftBank’s hopes for a big public market debut for the tech company.
Arm’s solution involves transferring shares in Arm China to a SoftBank special purpose vehicle, according to a report by Arash Massoudi, Anna Gross and Ryan McMorrow. That would change the relationship from an equity stake to a licensing agreement, allowing Arm to receive licensing revenues but not need to audit its finances.
In theory, the arrangement would bolster SoftBank’s hopes to complete Arm’s IPO within a year. A planned $66bn sale to Nvidia, which would have been a record deal for the chip sector, collapsed in February.
In practice, the path is fraught. Wu holds the “chop”, the traditional company seals that are the only means of authorising official documents in China, which makes it hard to change domestic company registration without his involvement.
There is also the small matter of the local government in Shenzhen, which Arm and SoftBank have been in negotiations with for months. People briefed on the discussions told the Financial Times that the government sees the spat as a chance to get concessions amid fears that Arm could one day stop providing key semiconductor blueprints to China.
Arm’s story post-2016 has been one of the collision of tech and geopolitics. Alex Younger, the former chief of the UK Secret Intelligence Service, was among many who expressed dismay at SoftBank’s plans for a US listing. How the next stage of the company’s Byzantine journey plays out remains to be seen.
The Internet of (Four) Things
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4. Is VR fitness a revolution in waiting?
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Tech tools — Dyson Zone
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