Our reporter Qin Xiao reports from Beijing
Recently, according to Nikkei news, British chip design giant arm has transferred the shares of its Chinese joint venture anmou Technology (China) Co., Ltd. (hereinafter referred to as “anmou technology”) to a company jointly held by arm and Softbank group of Japan.
It is reported that arm will continue to hold the equity of anmou technology through the company after the share transfer, and the transferee company does not have the purpose of issuance. A statement issued by arm in this regard said that the decision to transfer the shares of anmou technology was made after considering the “accounting reason”, which will not change the role of anmou technology as the main distributor of arm’s authorized IP to Chinese customers. According to the analysis of foreign media, the share transfer may accelerate the independent listing of arm.
The reporter of China business daily verified the above information from arm and anmou technology. As of press time, no reply has been received. However, a number of industry insiders told reporters that anmou technology cannot be simply regarded as a Chinese subsidiary of arm, which is now a Chinese controlled and independently operated company.
Control dispute
In the consumer electronics market, arm is a very important technology company. Because the vast majority of consumer electronics represented by smart phones are chip solutions based on ARM architecture.
The establishment of arm’s branch in China dates back to 2002, when its Chinese business headquarters in Shanghai was called anmou consulting (Shanghai) Co., Ltd. Subsequently, the second and third offices were established in Beijing and Shenzhen in 2004 and 2008 respectively. At that time, the offices of arm in China only had sales and marketing functions.
After years of painstaking operation in China, on May 14, 2017, arm and China Houan innovation fund signed a memorandum of cooperation in Beijing and planned to promote the establishment of a joint venture in Shenzhen. By September 2017, anmou Electronic Technology (Shenzhen) Co., Ltd. officially changed its name to anmou technology, and then changed from the original wholly-owned subsidiary of arm in China to a joint venture controlled by China and operated independently.
In June 2018, Softbank sold its 51% stake in anmou technology to a group of investors including China Investment Corp., silk road fund and Singapore Temasek Holdings at a price of US $775.2 million. Arm retained a 49% stake.
Over the past few years, the relationship between arm and anmou technology has been the focus of the industry, especially after the battle for control of anmou technology in 2020.
On June 10, 2020, arm company and its Chinese joint venture Houpu investment issued a statement: Wu xiongang, executive chairman and CEO of arm China, was dismissed. The board of directors of arm China has appointed Ken Phua (Singaporean nationality) and Phil Tang (Chinese nationality) as the interim joint CEO of arm China and replaced Wu xiongang as executive chairman and CEO. However, anmou technology and Wu xiongang refused to accept the resolution. Subsequently, the two sides issued several statements to confront each other across the air.
Foreign media reported that arm was unable to audit the accounts of anmou technology, and the lack of transparency in the financial situation of a key business unit may make it difficult for investors to value the business of anmou technology, which has become an obstacle on the road of arm’s independent IPO. In response, the spokesman of anmou technology publicly responded that they will continue to provide financial information to arm and are a key contributor to arm’s business growth.
According to foreign media reports, in the past two years, arm has been trying to win the control of anmou technology, but the dispute over the control of anmou technology has not been resolved so far.
However, with the transfer of arm’s shares in anmou technology, the relationship between the two sides became clearer.
Recently, arm said in a brief statement to the media that arm’s decision to transfer its shares in anmou technology was made after considering “accounting reason”. Arm said in a statement that the move will not change the role of anmou technology as the main distributor for arm to authorize its IP to Chinese customers, which also means that arm will continue to obtain license revenue from anmou technology.
However, the industry generally believes that arm’s move actually clears the way for its IPO. The securities and Exchange Commission (SEC) said that based on the foreign company Accountability Act, if a foreign listed company fails to submit the report required by the US listed company accounting oversight committee for three consecutive years, the SEC has the right to delist it from the exchange. Therefore, if arm cannot provide access to Amway technology finance to the US audit department, they will face the risk of delisting from the US stock exchange in the future.
Han Lijie, a partner of Kaiteng law firm, said that arm’s transfer of the shares of anmou technology to a special purpose company that does not belong to the issuance will enable it to indirectly hold the shares of anmou technology. This also means that when reporting its financial position, it can treat anmou technology as an investment rather than a joint venture. This may be Softbank’s deliberate choice to deal with the impasse between arm and anmou technology.
NVIDIA announced in 2020 that it would acquire arm at a price of US $40 billion, but on February 8, 2022, NVIDIA said in a joint press release that its plan to acquire arm from Softbank had failed due to “major regulatory challenges”.
On the occasion of announcing the abortion of the transaction, Softbank said it would start preparing for arm’s IPO in the fiscal year ending March 31, 2023.
Sun Zhengyi, CEO of Softbank group, said, “our goal is to achieve the largest IPO in the history of semiconductors.”
“China’s anmou”
However, tianyancha showed that on April 7, an equity transfer occurred in anmou technology, and the transferee was a company jointly held and controlled by arm and Softbank.
Wang Zhiwei, a semiconductor analyst at Xintai securities, told reporters that although arm owns most of the equity of anmou technology, anmou technology cannot be regarded as a subsidiary or distributor of arm in China. Personally, anmou technology is more like arm’s customers.
Since 2018