Where do global IP giants go?
Text/Shanshan Xu
After a big round, Arm finally chose the road to go public. Although there is no support from NVIDIA, perhaps more "SK Hynix" are coming forward and sending investment. Before that, Arm had to face one of the questions: what to do with the Chinese joint venture.
The Financial Times recently quoted people familiar with the matter as saying that Arm is considering transferring its shares in Arm China (Anmou Technology) to a special purpose agency (SPV) under SoftBank Group.
The reason is that with the beginning of the "infighting" in 2020 and the breakdown of the relationship, Arm has been unable to carry out the normal financial report audit work of Anmou Technology, the control is useless, and its listing plan cannot be stranded. Handing over the shares to the parent group, SoftBank, may be the best compromise.
Changing roads?
Image source: Sky Eye Check
Tianyan's investigation shows that Arm holds about 47.3% of Anmou Technology's shares. If the transaction with SoftBank Group goes smoothly, SoftBank will become the largest single shareholder of Anmou Technology, and the relationship between the latter and Arm will also change from a holding to a licensing relationship.
Industry insiders said that if the equity transfer is successful, Arm is likely to no longer authorize Anmou Technology's new IP products. In fact, this concern has been there before.
As a global IP leader, Arm develops CPU and GPU architectures for smartphones, cars and other devices, and its share of the in-vehicle infotainment and autonomous driving market is currently less than that of the mobile phone and IoT processor markets, but Arm plans to achieve a 90% market share of in-vehicle infotainment and DAS by 2028.
Since its establishment in 2018, Anmou Technology has a permanent and exclusive product sales right of Arm in the Chinese market, and an independent research and development right based on Arm's technology architecture. However, under a series of changes, the relationship between Anmou Technology and Arm has become extremely delicate.
Daily Auto Telecom asked Anmou Technology about Arm's transfer of shares, and the other party only said that "there is no information that can be provided at present".
Judging from the failure of Arm to regain the initiative, it may be the easiest way to give up shares if it wants to go public as scheduled. But in this way, its business in the Chinese market will only be left with licensing revenue, which is tantamount to abandoning the Chinese market; moreover, Anmou Technology contributes about a quarter of its sales, and it is unknown whether it will have an impact on the valuation of Arm's listing.
Although Arm cutting meat can promote the development of the domestic IP industry to a certain extent, it is almost a "lose-lose" result for the two companies.
investment?
Rao is so, Arm is still a "fragrant food" in the industry. Following the failure of NVIDIA's $40 billion acquisition plan, SK Hynix also conveyed the idea of favoring Arm.
According to Yonhap News Agency, SK Hynix vice president Park Chung-ho said the company may form a consortium with strategic partners to buy Arm. He said at the annual shareholder meeting, "I don't think Arm is a business that can be acquired by a single company. ”
The main reason why U.S. regulators earlier vetoed Nvidia's acquisition was that the deal could weaken competition in ADAS and in-vehicle infotainment systems. Nvidia is the global leader in autonomous driving chips, and the combination of a chip design company and an IP company will undoubtedly pose a threat to other chip designers.
SK Hynix is different, although it is the world's second largest flash memory supplier, but it has been struggling to revitalize the chip foundry business. Recently, South Korean regulators approved its acquisition of local foundry Key Foundry, and it is clear that SK Hynix's plan will not stop there.
For SK Hynix, Arm has the potential to be a bridge to its connections with chip design companies, as Arm has customers across the globe. At the same time, according to SK Hynix, the company did not fully control Arm's ambitions, but sought partners to "join".
This statement seems to get rid of the suspicion that it may interfere with market competition, but after all, this is a multi-billion dollar transaction, and there is no basis for claims. If it can complete the transaction before the time point of Arm's listing next year, it may be another variable for the global IP market.
According to SoftBank's financial report, Arm's losses in fiscal 2020 and fiscal 2021 were 42.819 billion yen (about 2.354 billion yuan) and 33.873 billion yen (about 1.862 billion yuan), whether it is choosing to list in the UNITED Stock Market or being acquired, it is extremely important to enhance profitability. However, this will continue to retain a question mark after the transfer of the shares of Anmou Technology.