Arm wanted to exclude the problematic subsidiary Arm China from relations with Chinese companies

Founded in 2002, the Arm China subsidiary was fully owned by the British Arm holding company until 2016, but after 51% of the shares of this structure went to a consortium of Chinese investors with state participation. Arm China in fact acted as an intermediary between the parent structure and Chinese clients who bought licenses, but now the parent holding wants to build direct relationships with them.

Image Source: Arm

Since Arm China has a certain percentage of the profits Arm makes in China, direct interaction with Chinese customers would allow the British holding to improve its profitability. As Tom’s Hardware notes, citing a DigiTimes publication, the parent holding hopes to sell at least part of its licenses directly to Chinese customers. This is not the first problem in Arm’s relationship with its Chinese “daughter”. Some time ago, the rebellious director tried to carry out a raider takeover of its assets, but later Arm managed to regain control of this company.

Arm China has a certain independence. For example, it can develop Arm-compatible architectures and even license their use to the parent company. In September this year, Arm China introduced the first in-house developed Linglong family of GPUs. According to some reports, Arm China is also developing multi-chip packaging and graphics processors for computational accelerators used in artificial intelligence systems.

For parent Arm, the Chinese unit is an important source of income. In the second quarter of this year, it provided the British holding with 13% of its total revenue. It is possible that Arm’s desire to do without intermediaries in relations with Chinese clients may face obstacles in the form of sanctions.