Arm China Has Gone Rogue

https://en.wikipedia.org/wiki/Samuel_Slater

" In the UK, he was called "Slater the Traitor"[2] and "Sam the Slate" because he brought British textile technology to the United States, modifying it for American use. He stole the textile factory machinery designs as an apprentice to a pioneer in the British industry before migrating to the United States at the age of 21. He designed the first textile mills in the US and later went into business for himself, developing a family business with his sons. He eventually owned thirteen spinning mills and had developed tenant farms and company towns around his textile mills, such as Slatersville, Rhode Island."

Historically, strong international IP protection only becomes extra important once you are an a big established incumbent rather than a developing upstart country.

https://mattstoller.substack.com/p/how-bill-clinton-and-amer...

Contrast with how Chinese companies operate in the west, essentially imposing a system of apartheid between Chinese bosses and western workers.

I wonder how this happens. Is it the naivety of leadership at western corporations, or is it simple greed because those leaders may show short term results that boost their compensation? And of course, I have to wonder why western governments don’t restrict their corporations from risking their economic and military sovereignty in the future through these terrible partnerships.

The same thing is happening in aerospace and it isn’t even new. For example China tried cloning a Boeing jet it acquired way back in 1980 (https://www.washingtonpost.com/archive/politics/1980/05/09/c...). China’s more recent attempts are much more successful (https://www.bbc.com/news/business-47689386) and although they rely on western avionics and engines, I am sure they’re busy trying to clone those as well.

EDIT: found an article detailing IP competition and theft relating to HSR broadly, including maglev (https://itif.org/publications/2021/04/26/heading-track-impac...)

Of course, the state controlled joint venture gives more benefit on the table, like any business deals.

Use your brain...

US capitalists are the best and smartest. You think they are willing to subject to such draconic rullings?!

Arm China was set up because they want to be listed on the Shanghai Star board, the Chinese Nasdaq. If Arm just want to do business in China, it's totally OK to have fully owned subsidiary.

And this whole setup was in turn from Softbank's acute sense that Arm China will be given a lofty valuation because of the tech wars happening right now...

And for all are happening right now, it's because Mr. Wu learned how to manuvurer based on his own interests. The Chinese investors are actually not directly benefiting from this mess.

Yes, China does steal US technology and industry and yes, it has happened on a number of occasions with concrete documentation. However, that does not mean that China is not capable of innovation or shrewd business moves and it should not be assumed to be the norm.

Got it.

If it's taken for granted that its impossible to make profits on the Chinese market, the best outcome for a company is to sell their IP to China and make sure the markets are kept completely segregated.

This is a rogue CEO who is exploiting a particular legality niche to fight his own board. And had committed misconduct before.

This is a extradinary situation. Not something you see often.

"Before we get to the event they held and the significance of it, let’s do a recap."

He refuses to leave and he has the stamp. The 7-1 vote was even mentioned.

I would love if you could find those images from the event last year. You would need a time machine for that.

Chinese is totally fine.

In english please

(Just thinking about that makes me laugh. The environmentalists, the labor folks, the real-estate folks, the local and state tax authorities -- all will either slow things and/or get their cut. From what I understand the sad truth is that the CCP's real economic advantage lies in ignoring the environment, workers rights, and real-estate rights. So we are stuck with on-shore "too much" and Chinese "not enough" in each of these categories. Plus, our justice system is entirely dysfunctional and slows everything down 100x and increases cost of everything 1000x).

Until managers start getting sacked for dealing with China, this will continue.

A capitalist will sell you the noose you hang him with.

One of the cancers the West needs to deal with is people who value capitalism and personal greed over any other commitment, and the lack of political will to contain them.

It’s been that way for ages, you don’t get allowed to do business there otherwise

How much of it do you think has been audited for IP protection?

Ha! "Burn in tests" indeed, that is pretty funny.

They started at the bottom rung of the quality chain. They are constantly climbing it up but the speed seems slow. Then suddenly they are in par or little ahead.

Chinese are already within a spitting distance in most technologies. Semiconductors have some technology bottlenecks like EUV machines that are hard to replicate. Chinese firms are already in a position where they don't need joint ventures. They hire directly senior engineers from South Korean and Taiwanese firms to work for them.

It's only a matter of time until they work their way up the chain.

Remember the Tim Cook quote how it's difficult to fill a room with machinists in US, while in China you can fill 3 football fields with them.

There's a pretty reasonable chance part of the downfall of Nortel was a lot of their data being extracted by the government and provided to Huawei.

After Nortel shut down, the Canadian Department of National Defense picked up their headquarters to move into, but the move was delayed for years because the building was chock full of listening devices.

This started almost 20 years ago. But here we are still willing to gamble that they'll respect our IP because maybe we can make a few bucks.

So basically they're just rushing to steal and copy all the technology they can, so they can make everything they need for themselves internally. Their goal isn't to compete internationally, just to be self-reliant enough to have a reasonably good economy while maintaining absolute political control.

China probably doesn't care that they can't access IP from other countries again. They've mostly gotten what they need.

The alternative is that the party gradually loses its power, and that liberalisation eventually makes the whole system collapse. It's the exact same forces that made the Soviet Union collapse and it's well known that this is Xi's biggest fear.

Don't be silly, common sense applies in China...

One Japanese word for conspiracy is in 陰謀 (inbō): conspiracy (lit: hidden plan); 陰謀論 (inbōron) means "conspiracy theory".

The "Peacefuly Scheming Technology" company.

https://www.mdbg.net/chinese/dictionary?page=worddict&wdrst=...

How do we live in a society where we can just be aimed at a new foreign enemy and all of our free, enlightened citizens go along every time? Russia (support afghanistan), Iran (support Iraq), Iraq (support gulf emirates), Al Qaeda, Afghanistan, Iraq again, now China! It seems so normal to us, because that's all we know.

They're not perfect, we're not perfect, and both states are feeding off of national rivalry to legitimize themselves because that's what states do.

>How do you live and decide with a government over you that can grab control at any time they wish?

You don't. That's why chinese millionaires/billionaires are parking (at least some of) their wealth outside of china so it's safe from expropriation by the chinese government. Also, this isn't limit to china. It's the default state of affairs when rule of law and property rights isn't respected (ie. most developing countries).

SOOOOO NO. In this case, ARM China has one oddball dude who is playing Robinhood to the World Order Intellectual Property Policing Regime that has been absolute & tyrannical. No country in the world DARES tries to do a single thing on their own.

We're just getting wind that 10 years ago, Microsoft and IBM showed up and told New Zealand, who was dangerously considering thinking for themselves, that they had to fall in line, and sure enough, they bought the influence they needed[1].

Your wind up is 100% about fear, about a country where liberties are constrained, data monitored & controlled. And yet this story is something utterly different. This occurrence is different. It's not about your personal liberties being stepped on. This is where a person within a nation finds a way to use that nation to seize control of that arm of the business. But what's wild here to me is: that person is going to act like Robinhood. They've stolen intellectual property, freed it from the shackles & chains the rest of the world says it has on it. The rest of the world restricted the liberty of this information, the rest of the world prevented discussion of this information, the rest of the world monitored how it was used. The rest of the world backed ARM Holding LTD's exclusive right to determine the fate of the chips used almost everywhere on the planet, at all manners of scale, and no one absolutely no one had a single say about that. That's what Intellectual Property meant to the world.

This sounds like a total nutjob episode, aboslutely wacked out single-actor hijinks. But holy shit, this is about freeing something that has been locked up for a long time, and it's fucking epic.

[1] https://wiki.endsoftwarepatents.org/wiki/IBM_and_MS_deciding...

The only thing they care about is money. They'll never stop doing business with China until it stops making them money.

Highly centralized (command & control) and mercantilist systems tend to do well in the short term, but struggle and founder in the long term. In contrast, more chaotic, free market economies tend to look messy in the short term, but achieve amazing, spontaneous order over time.

But people care primarily about their economic well being, and whatever system delivers it is what they'll be happy with. There are no huge movements calling for democratic reforms in well off non-democracies like Saudi Arabia, or the Gulf states. And even in democracies like Hungary or Poland the slow slide to a more authorotarian government hasnt got the majority of people worked up, as long as their personal circumstances arent too badly affected. Democracy is only that thing which is demanded when they want to change their circumstances for the better, otherwise its forgotten or undermined when the good times are rolling.

Will China win? No I dont think they will, they dont have the ability to change course peacefully or quickly enough under an authorotrian system. They let momentum carry them in straight lines until they crash into a wall. Our problem is that we're stuck with a rich and technologically advanced threat that we built. Trump for all his faults did the right thing by starting the economic war with them, Obama was quite happy to let the status quo of technology, capital and job transfers continue unabated.

But we havent learnt our lesson and we risk making the same mistakes with India. The western nation are looking for another low wage, low cost manufacturing base, and they're going all out on India. But we can see the authorotarian and less democratic direction the government there is taking everyday. Yet all our major tech companies and planning to build and invest in capacity over there. Until we end up with another rich and technologically nation that isnt a friend of democracy.

He is still defending his position. (He can't talk negatively about Cina anyways) 'Billionaire investor Ray Dalio said investors are misconstruing China's regulatory clampdown on tech companies as "anti-capitalist."' https://www.cnbc.com/2021/08/25/ray-dalio-wrong-about-china-...

Already in 2018 someone asked: "Ray Dalio Needs China. Does China Need Ray Dalio?" https://www.institutionalinvestor.com/article/b1936rrvltbzc1...

Dealing with China requires multilateral agreements to make sure companies and executives don't sell-out at the expense of the democratic open societies.

Even naturalization or birth in America can't erase ties to Chinese entities, through family links for instance. Beware of double allegiances. [0]

[0] https://www.justice.gov/opa/pr/former-raytheon-engineer-sent...

Chinese people earn 15-20% of graduate STEM degrees in US, double the percentage of 10 years ago, and not counting second generation Chinese. At this rate, 'US' STEM will be Chinese dominated long before anyone wakes up to the security risk.

https://crsreports.congress.gov/product/pdf/IF/IF11347

https://cset.georgetown.edu/publication/estimating-the-numbe...

I generally don’t like such jingoistic statements but I think this is basically true, at least in the 2020s.

I will also note that this has come as a surprise to many Chinese entrepreneurs, most famously (but far from exclusively) Jack Ma.

1. US military and economic power meant that countries could be relied on to follow US influenced IP laws or be excluded from the global market.

2. US military and economic power was large enough and benign enough that no major trading partner would pose an existential military or political threat - validated by the economic rise of Germany and Japan.

These two ideas powered US and to a lesser extent European outsourcing for the next 40 years. Very few executives believed that there was a serious risk of their outsourced manufacturing or outsourced engineering firm becoming independent - and they certainly didn't think through the reality that in such an event the holding firm would not have the capital or knowledge to compete against the newly formed firm.

The reality is that the US and Chinese economic spheres are likely to fracture in whole or in part. China owns the factories and the IP, the Chinese military is increasingly capable of achieving any military goal they are likely to have against the US military using indigenous military hardware.

There is no reason the Chinese authorities would not support subsidiaries and joint ventures becoming independent by eliminating legally ambiguous joint ventures and Variable Interest Entities, forcing sales of Chinese assets to Chinese investors, or simply creating new legislation to free such entities from foreign corporations.

I fear that the US has been so focused on outsourcing for the last 40 years that it's forgotten how unusual of a relationship outsourcing was in the first place, and why it wasn't done for most of the industrial era.

If we imagine a Swedish chip maker that wants to become a global powerhouse, the US will dip a finger or two in it to make sure it mostly goes along their interests, otherwise the maker will just get banned from US use (Huawey…). China will do the same if the chips ever touch the chinese soil. Japan will tax it through the roof anyway. India is another kind of wild ride.

We’re left with the Russia, middle east, and Africa. Basically any company with big ambitions will need to choose to open up to China or US control up to a point, and understand that if they really become critical any legal ground they stand on can be swooped away with a sleight of hand.

> If China wants to impose such restrictions on Western companies, they shouldn't get access to Western markets. And that's it.

And there are people around who give this a pass. And usually the defense is "China is just following Chinese law".

I'm not so sure. It just goes through a few more mediators and more roundabout ways.

In the end, the fruit companies that turned Latin American countries into banana repubics, for one example, had big support from the state and vice versa. Ditto for oil, telecommunications, social, and so on.

I agree with most of the rest you said... This is about markets and it is about the protection of IP.

Edit: Spelling

Isn’t it the MO of any country that wants to go ahead ?

Wasn’t born during the period, but I know of the US’ Japanese bashing in the 80s and pulling all the levers to stop foreign companies from getting dominant in the car market. As far as I know Toyota & co had to bring manufacturing to the US to get a foothold, and I get the feeling China has just made that a policy from the start instead of going throught all the cycle.

Economic isolation would mean war.

I was at Google during the Project Dragonfly revelations. My name is on this petition [0]. Internally, I expressed discomfort at cooperation with a state that (among other things) sets up covert Communist Party cells at American universities and requires Party members to write reports on other Chinese students' political speech and activities. After sharing this concern, a fellow Googler reached out and told me earnestly, "don't worry, none of us writing those reports took it seriously."

This was cold reassurance.

[0] https://medium.com/@googlersagainstdragonfly/we-are-google-e...

Arm China had stellar financial results. Arm holding, with 49% share of the company, has significant upside to gain from the market.

And this fiasco is partly a misconduct of Mr. Wu, showing no signs of being directed by Chinese investors.

And partly because of Trump's tech ban, which obviously affect arm China's prospect.

And then this statement: > I believe the US government will at some point soon decide that any person born in mainland China is a security risk as far as working on anything national security related.

Even if Mr. Wu was directed by CCP, how can you extend that to all of Chinese immigrants? There are plenty of Chinese Americans who had misconduct inside China, and flee the country back to US to escape Chinese law (numerous corrupted officials of course are such examples) recently https://m.sohu.com/a/412302008_220095/?pvid=000115_3w_a are these people US spys to sabotage Chinese economy then? How ridiculous was that logic.

define "win"? To corporate America, making profit is a win. Even being the market leader is not a requirement.

Where this comes to a head, and where western capitalistic governments seem ill equipped to handle it sufficiently, is in how China itself can and does act like one giant super conglomerate company and uses that to bully smaller companies because they are bigger than anything around. Western governments are loathe to intervene in business dealing when they don't have to, because their systems are based on a fairly hands off approach with the free market. The one place they sometimes do step in is when there's a monopoly or some other anti-competitive practice. The problem here is that the anti-competitive practice is being enabled by a foreign state that's working under the illusion of separate corporate entities.

What's a country like the US or UK to do? Tell it's local companies that want to and are totally willing to shift IP to China to access the market "No, sorry, you aren't allowed to, even though you own that information and it's not a state secret"? That may be what's needed, but it's a large difference in thought in how they've treated their markets to this point.

We are not oblivious.

Some are, some aren't. The current China "antitrust" flap is over ones that got really big without being extensions of the state, such as Tencent and Ant Financial. The classic big ones, such as Baowu (steel), Cosco (shipping), and China Railway Group (obvious), are directly state-owned. There are also large companies owned by provinces, regions, and cities. Most small and medium sized companies, though, are not state-owned. State ownership of almost everything was tried during the Mao era, and it didn't work.

The CCP insists on being the only major center of power in China. They're willing to tolerate capitalism until it generates companies big enough to push back. Those get taken over or converted to state ownership.

We've staffed our campuses and laboratories with these people because there's nothing university administrators like more than cheap labour. The Chinese Communist Party has agents inside western countries who can get to these people, to say nothing of what they can do to these people's families back in mainland China.

You think that American companies aren’t tools of the state?

Why? Why should we prohibit US citizens from purchasing things they want from wherever/whoever they want? Why would we do that to ourselves (I'm a US citizen), and to each other?

Anyway, as you see I am not optimistic.

Unfortunately, the reality is that while (in my opinion) liberal values create better outcomes, it takes care and concerted effort to get the benefits. A democracy isn't automatically better than an authoritarian regime; that assumes that the democracy is effective and that the authoritarians are not.

The CCP is clearly effective. They are able to nail jello to the wall and have it stick. The US Congress is clearly not effective. Chinese people got to go to movie theaters and eat at restaurants and dance at raves for most of 2020 and 2021; I, as an American, could not. The CCP delivered for their people in a way that the US did not.

The United States is not particularly effective at national security (2021-01-06), foreign engagements (Afghanistan and Iraq, last 20 years), or social mobility (https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...). The media ecosystem is a mess (due to purposeful de-regulation), voting rates are abysmal, education is poor by rich world standards. Democracy doesn't work well when the populace is not sufficiently educated, accurately informed, and empowered by a political system (see the Senate's strong R electoral advantage). We keep choosing leadership who lose at the polls because we haven't invested in modernizing our democracy.

The US and other Western states need to step up and put in the work to prove that their values can deliver for their people better than the authoritarians can.

A large digression, but I do wish we didn't need these silly ritual flagellations each time we mention that the West was actually pretty good. To call these things "human rights violations" implies that the West defied some accepted standard for how we treated people, but the West was always on the leading edge for human rights (slavery, colonialism, racism, etc were normal on virtually every continent until the West decided they were wrong). We often talk about the West as though it is some great failure because it didn't emerge from the mists of history fully-formed and prepared to adhere to our modern moral standards, ignoring the fact that our modern moral standards are precisely the product of millennia of Western progress.

When we sold our manufacturing base and equipment to them, then bought the same products from them just shipped over seas. They had suppressed labor prices and used it to tilt the table.

So we need a totalitarian government to compete with their totalitarian government? No thank you. If your company gets ripped off by the Chinese, like many do, then that is your company's fault.

But, according to the article, ARM Britain didn't sell to China, SoftBank (Japan) did.

Meanwhile, the EU has banned borax on grounds that amount to pure superstition, California has banned xylene, Texas only recently repealed a years-long lab glassware ban, the US Supreme Court didn't legalize screen-scraping until this year, and the USA still has 1% of its adult population imprisoned, just like shortly after the lead-driven crime wave crested 30 years ago (I guess its legislature does get some things done; they also direct the world's biggest military budget). Also, the US maaybe just passed 50% of the population believing in evolution, and gifted programs are being cut out of their high schools because they "promote inequality". And apparently police killing people with impunity is a major political cause in the US now? And let's not forget that Armadillo Aerospace had to abandon their working rocket engine design and restart from scratch because nobody would sell them peroxide, probably due to the US regulatory regime surrounding product liability. And when Clinton launched the National Nanotechnology Initiative in 02000, instead of diamondoid mechanosynthesis we got the fraudulent rebranding of any random submicron particle research, down to the study of medieval stained glass, as "nanotechnology".

In short, the US and EU are stupid enough that they're dooming themselves, regardless of whatever happens in China. I can empathize.

Having your government run by the kind of people who would vote for Donald Trump might be okay as long as the government doesn't control anything important, but inevitably putting the foolish and stupid in charge of the wise and learned is going to end in disaster, as it has with the covid pandemic. On the other hand, dictatorships and monarchies are no guarantee of wise leadership, often the opposite; they tend to oscillate randomly, often when succession happens. Marcus Aurelius is succeeded by Commodus, who is succeeded by Pertinax, then Didius Julianus, and the country is thrown into catastrophe. Qin Shi Huang may have been an asshole who destroyed China's cultural heritage, but he wasn't the fool Qin Er Shi was.

I'm not sure Star Trek is a worthy ideal; it's a militarist naval soap opera that doesn't begin to grapple with the political and psychological implications of post-scarcity civilization. Let's have the courage to imagine a future worth living in, and then create it.

The subsequent ideological compromise of the West is the result of the CCP getting its tendrils into Western leadership (https://nypost.com/2020/12/13/us-companies-riddled-with-memb...) and culture. This video of John Cena apologizing for recogizing Taiwan as a country in Mandrin should have been a deeply frightening wake up call: https://www.youtube.com/watch?v=zre2p7mg64g&ab_channel=China....

We also have 300 years of history showing what happens to countries who adopt policies that China do (it used to be called Mercantilism). It has always been an excellent system for copying superior countries and catching up with them. It is also an excellent system for launching economic (and real) warfare against your enemies, but in the end it always leads to stagnation (which in turn leads to these kind of countries using their state power for the only thing it is really good for - war).

History shows that this will be the path China takes. We can only hope China begins to suffer from the stagnation part before they destroy the world.

Oh, what's that? Someone who didn't put $100M of their own money into R&D just came along and stole our design. Now I'm $100M in the hole, and need to sell my product for more money than my rip-off competitor, because I actually need to make my R&D investment back. Of course, consumers don't care about whether I invested money in R&D or not, they just want the cheapest thing. So they buy the rip-off, and then I go out of business.

I've learned my lesson: Never innovate when someone can come along and just take exactly what you innovated. It's far better to be a parasite, and rip off a true innovator and send them into bankruptcy while you reap the profits.

Where exactly does the innovation race happen?

If I could just steal books and publish them as my own, do you expect there to be an "innovation race" in authorship? Or, will authors-who-earn-money just stop writing because they can't make a living off of it?

Company take-overs maybe. But to say that this is like the past is either ignorant or misleading. The stakes here are so much different than a mere spat over corporate property.

This is the modern right to build computing machines. One rogue element in China has hijacked not merely a company, but a volume of IP that circumscribes probably hundreds of billions of devices. 99% of the consumer mobile devices on the planet are powered exclusively by this IP and a vast vast range of other consumer devices too. By usurping & overthrowing IP controls, by seizing this asset, Allen Wu has instigated a civilization-level technical fork, where the rest of the world has pre-legally-bound themselves to ban practically all future ARM China chips & any device licensed by ARM China. ARM China meanwhile is incentivized to license, sell & distribute as widely as possible, to make themselves an interesting competitive force, turning the heist into a self-sustaining movement of progress & growth for chipmaking, bolstered by less rules, less cruftiness, less legalese, more can do.

Just to remind everyone, software has eaten the planet. Modern upstarts like RISC-V have been trying to grow a reasonable new basis to compute from, to host software atop, but to be honest, x86 and ARM are the only two players running this world-eater. AMD has gotten to play & keep x86 interesting & competitive because they got a license very very long ago, and ARM has been holding the reigns of the other horse, dictating how it evolves. RISC-V is just getting started, is almost no where, is only beginning to find itself, albeit has some good chops demonstrated on the lower end microcontroller type chips. But so far no one has been able to be interesting with chips. And ARM China is hereby announcing that they give no ducks, that they have whatever blasted sovereignty they want, that they will take & make new as they see fit from here on out. And they will almost certainly find many in China to work with. Which is something ARM in the rest of the world has gotten worse and worse and worse at over the years, as countless companies fold their application processor divisions to increasing competition.

China simply stole an entire business division.