Arm wants to go direct Chinese market, no more ArmChina middleman

Date:
Fri, 18 Oct 2024 10:28:00 +0000

Description:
After establishing a China-only subsidiary, Arm wants to go back to selling direct to the Chinese market.

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British semiconductor giant Arm is reportedly looking to bypass its Chinese subsidiary, ArmChina, by offering IP licenses directly to Chinese customers, according to DigiTimes reporting (via Toms Hardware ).

Arm China, established in 2002, remained a foreign-owned enterprise in the nation until 2016 when a majority (51%) stake was sold to a Chinese investor consortium.

At the time, it was hoped that the sale would help Arm comply with local regulations better as well as adapt to Chinas unique needs. Arm wants to abolish Arm China

Since 2016, Arm China has acted as an intermediary, earning itself a margin
by licensing Arms IP to Chinese customers, however tensions between Arm and its Chinese subsidiary have been ongoing for several years, centered mostly around who controls the division.

The British company now appears to be exploring ways to circumvent the joint venture model by selling directly to China. By doing this, it would be able
to increase its gross margins by eliminating the need to share projects with Arm China.

Despite tensions, Arm China continues to contribute pretty significantly to the overall business. It generated $122.6 million in the second quarter of 2024, accounting for around 13% of the overall companys revenue.

Moreover, Arm China has been busy developing its own processor IP. In September, it launched its domestically-approved Linglong graphics and video processors, and has also reportedly been exploring general-purpose GPUs for
AI and HPC, reflecting Chinas push for semiconductor self-sufficiency in
light of ongoing geopolitical tensions and subsequent restrictions and sanctions on imports and exports.

In a letter to shareholders following its most recent quarterly earnings report, Arm CEO Rene Haas and CFO Jason Child wrote: We expect the migration of AI from the cloud to edge devices to drive even higher compute demand per device over time and Arms unprecedented share across all end markets means that Arm is uniquely positioned to benefit from this migration, which will increase royalty revenue per chip.

TechRadar Pro has asked the company about plans to sell direct to the
Chinese market, but the company did not immediately respond. More from TechRadar Pro These are the best cloud storage management services Fancy an upgrade? Here are the best business laptops and best mobile workstations Huawei is dodging advanced chip sanctions through suppliers, claims US Select Committee



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Link to news story: https://www.techradar.com/pro/arm-wants-to-go-direct-chinese-market-no-more-ar mchina-middleman


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