Arm is grappling with a US-Chinese conflict over technology that has uncertain implications for foreign operators.
SEVERAL key former employees from Arm Holdings’s Chinese venture have started a chip design house with local government backing, adding to uncertainty in the British firm’s biggest market just weeks after it raised US$5 billion in an initial public offering (IPO).
The departures from Arm China included the head of R&D, a regional head of sales and a government relations employee who is now chief executive officer of the new firm, Borui Jingxin, sources familiar with the matter said. The two-and-a-half-year-old firm is backed by Shenzhen’s government and aims to raise capital and recruit engineers – including from Arm. Borui is also a major new Arm licensee and aims to devise chips for servers, said the sources, asking to remain anonymous discussing confidential deals.
Arm – whose chip designs power most of the world’s mobile devices including Apple’s iPhone – is grappling with a US-Chinese conflict over technology that has uncertain implications for foreign operators. Now, several investors have told Bloomberg News they are concerned Borui could eventually divert revenue from the China venture, in part because of the uncertainty that’s surrounded the operation in past years.
The Borui defections mark the latest chapter in a turbulent history for Arm in the world’s largest semiconductor arena. After Japan’s SoftBank Group acquired Arm in 2016, it ceded majority ownership in China to local investors. SoftBank and Arm then ended up in a years-long dispute with the CEO of the China business, who was fired but refused to leave. SoftBank and Arm ultimately prevailed in ousting Allen Wu last year, though he continues to hold shares in Arm China via entities he controls.
Still, Arm’s standing in a market where it derives a quarter of its revenue is precarious. The British firm conducts business through a complex arrangement with powerful local and government-backed interests behind the venture, Arm Technology (China). In a prospectus filed before its historic IPO, Arm acknowledged it does not control the China unit and faces the risk of losing all control over the venture. Arm China in February laid off about 100 employees, most of them from the R&D team, and some of those have joined Borui, the sources familiar with the matter said.
Borui’s business is not a threat to Arm China and rather it will benefit the venture by boosting revenue within the country, said other sources familiar with the startup’s operations.
SEVERAL key former employees from Arm Holdings’s Chinese venture have started a chip design house with local government backing, adding to uncertainty in the British firm’s biggest market just weeks after it raised US$5 billion in an initial public offering (IPO).
The departures from Arm China included the head of R&D, a regional head of sales and a government relations employee who is now chief executive officer of the new firm, Borui Jingxin, sources familiar with the matter said. The two-and-a-half-year-old firm is backed by Shenzhen’s government and aims to raise capital and recruit engineers – including from Arm. Borui is also a major new Arm licensee and aims to devise chips for servers, said the sources, asking to remain anonymous discussing confidential deals.
Arm – whose chip designs power most of the world’s mobile devices including Apple’s iPhone – is grappling with a US-Chinese conflict over technology that has uncertain implications for foreign operators. Now, several investors have told Bloomberg News they are concerned Borui could eventually divert revenue from the China venture, in part because of the uncertainty that’s surrounded the operation in past years.
The Borui defections mark the latest chapter in a turbulent history for Arm in the world’s largest semiconductor arena. After Japan’s SoftBank Group acquired Arm in 2016, it ceded majority ownership in China to local investors. SoftBank and Arm then ended up in a years-long dispute with the CEO of the China business, who was fired but refused to leave. SoftBank and Arm ultimately prevailed in ousting Allen Wu last year, though he continues to hold shares in Arm China via entities he controls.
Still, Arm’s standing in a market where it derives a quarter of its revenue is precarious. The British firm conducts business through a complex arrangement with powerful local and government-backed interests behind the venture, Arm Technology (China). In a prospectus filed before its historic IPO, Arm acknowledged it does not control the China unit and faces the risk of losing all control over the venture. Arm China in February laid off about 100 employees, most of them from the R&D team, and some of those have joined Borui, the sources familiar with the matter said.
Borui’s business is not a threat to Arm China and rather it will benefit the venture by boosting revenue within the country, said other sources familiar with the startup’s operations.