Arm cleared the obstacle for the IPO, and Anmou Technology was winding

Figure: Figure worm

Source: 21tech

Author: Luo Yiqi

Editor: Zhang Weixian

In order to quickly remove the obstacles on the road to IPO, Arm is continuing to make some adjustments to the operational level. One of the most concerned is the development of Chinese joint ventures that have been much pulled before.

On April 8, Arm officially confirmed to the 21st Century Business Herald reporter that Arm has completed the transfer of the equity held by the Chinese joint venture company Anmou Technology, but this does not mean that the two companies have been completely separated since then, but Arm will continue to hold the equity of Anmou Technology through an intermediate company, and this move will not have any impact on Arm's ecosystem in China.

Since NVIDIA's official announcement of the acquisition of Arm in February was ultimately unsuccessful due to many obstacles, SoftBank has said in a public announcement that it plans to prepare for a public offering of Arm in the fiscal year of March 31, 2023.

Arm then embarked on various preparations for an independent IPO. This includes restructuring the executive team and laying off 12%-15% of global employees, all of which have little impact on the operation of its joint venture in China.

Now this move, judging from Arm's statement, is more like a change limited to accounting performance. But it doesn't have any other impact on Arm's original way of revenue and the way it cooperates with Anmou Technology. Essentially, it is still working for a smoother IPO.

Equity transfer has been completed

Arm said in a statement to reporters that for internal accounting-related reasons, Arm has transferred its stake in Arm China to a company jointly held and controlled by Arm and SoftBank (Arm's current majority shareholder, SoftBank). Arm will continue to hold an equity stake in Anmou China through the company.

The company stressed that the IP licensing agreement and profit model between Arm and Anmou China remain unchanged, and Anmou China will continue to serve as the main commercial distribution channel for Arm to license its IP to Chinese licensing customers. "Arm is committed to continuing to support Aim China and our Chinese customers and will continue to maintain a successful relationship with the Aim China team."

However, these changes are not reflected in the industrial and commercial materials. The reporter's inquiry and investigation found that the industrial and commercial information of Anmou Technology has changed, and it is still stuck in 2019.

From the current industrial and commercial information alone, Arm Limited is the majority shareholder holding about 47.33% of the shares, and other shareholders also include some overseas companies and domestic private equity funds. According to the information previously provided by the government, in general, Anmou Technology is 49% owned by Arm and 51% owned by Chinese capital.

The enterprise investigation platform shows the shareholders of Anmou Technology

Therefore, the positioning of Anmou Technology has always been a Sino-foreign joint venture and a Chinese-controlled technology company. It can also be seen from the previous statement that Anmou Technology has always had a high independent operation right and emphasizes "local innovation".

Unlike Arm's recent layoffs based on "an appropriate balance between opportunity and cost control", Anmou Technology also publicly announced on March 16 that in the environment of many high-tech companies falling into a layoff storm, the company plans to recruit more than 300 people in 2022, covering processor development-related design, verification, algorithm and other research and development positions, as well as marketing, operation and other directions; there is no limit to the number of school recruitment.

Unique joint venture model

The industry believes that the relevant changes in the "accounting" reasons may be related to the previous confrontation between Arm headquarters and Anmou Technology on control.

In mid-to-late 2020, the latter, also known as Arm China, brought the differences between the company and its major shareholders to the forefront by issuing public statements.

The core is about Arm's involvement in Anmou's cooperation with customers and his intention to remove CEO Wu Xiongang, because Arm believes that some of Wu Xiongang's personal actions will be detrimental to the development of Anmou China. At that time, Anmou China believed that it was a joint venture company controlled by the Chinese side, and the shareholders' behavior should abide by Chinese laws and fulfill their social responsibilities in China, and these statements were highly supported by Anmou.

After many shouts, the differences between the two do not seem to be completely resolved, but there is a consensus: it is necessary to ensure the sustained and healthy development of Anmou in China. This is also considered to be a condition that Arm must solve in the independent listing process.

At present, Arm may also be working on solving this layer of historical problems. What is important is that as an IP supplier for China's huge application market, unlike Arm, which has been questioned about the lack of performance growth, Anmou Technology has been growing rapidly.

In its previous introduction to the 21st Century Business Herald reporter, Anmou Technology mentioned that the company's revenue increased by 250% from 2018 to 2021, and the self-developed IP business increased by 262% year-on-year in 2021.

Because of this, the industry believes that the growth of Anmou Technology is very important for Arm, and its unique localization operation in the Chinese market is a necessary condition for boosting rapid growth.

In the previous interview, Anmou Technology said that it inherited Arm's business in China, has a cross-licensing agreement with Arm, and can be independently developed on the basis of arm architecture. If it is a product developed in China, Anmou owns all its copyrights and patent rights. Recently, the company is also actively working with domestic partners to promote the creation of local ecology.

According to the research and calculation of Xinmou, Anmou Technology is authorized to sell or develop products containing Arm IP, and gives it a share according to the proportion of the intellectual property rights contained in Arm. From 2018 to 2021, The revenue contributed by Anmou Technology to Arm accounted for about 23%, 31%, 34% and 27% of the latter's total revenue, which also made Anmou Technology the largest customer of Arm. The agency also believes that if the external environment does not continue to shake, it is expected that the revenue contribution of Anmou Technology will be higher.

Xinmou research pointed out that with the Arm architecture being adopted by more and more companies in the Chinese market, and the global semiconductor supply chain is constantly changing, the existence of anmou technology model that is held by Chinese-funded companies will greatly ensure the development of the local semiconductor industry chain. Because of this, properly resolving relevant disputes and ensuring that Anmou Technology can continue to ensure the security of Supply in China's industrial chain is the only way for Arm to maximize its own interests in the Chinese market.

Editor: Lu Taoran