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China Dares Biden to Stop Its Pillage of a $50 Billion Company

AMAC Exclusive – by Daniel Roman

China

While American credibility is in shreds following the botched withdrawal from Afghanistan, Chinese leader Xi Jinping has moved in broad daylight to steal the intellectual property of Advanced RISC Machines (ARM)—a global technology giant valued at over $50 billion.  Absent a major reversal on the part of the Chinese authorities, China will have effectively nationalized the Chinese branch of the U.K.-based company overnight, and with it, staked a claim to all of ARM’s intellectual property worldwide. If Biden and the West fail to stop this theft—which has titanic implications not just for the electronics, telecom, and high-tech manufacturing industries, but for national security itself—the Chinese move will go down as one of the greatest geopolitical coups of the last century.

The precise circumstances of this coup demonstrates both the Chinese approach to business — a process of “chopping,” where the Chinese government requires international firms that wish to operate within the People’s Republic of China to sell a majority stake to Chinese investors — and the Chinese government’s long-term ambition, which is to eventually turn every 51% stake into a totality. There is a direct analogy between the process by which Beijing is seeking to turn a 51% stake in ARM China into a 100% stake, and how they turned what could perhaps be termed a “51% stake” in Hong Kong’s governance into 100% domination.

In the case of ARM, in order to gain access to the Chinese market, the world’s largest in terms of smartphones, ARM was required to create a local subsidiary to which it would transfer rights to all IP it wished to license globally. Such subsidiaries are required to have a majority share owned by Chinese investors. In the case of ARM China, this was 51%, with Softbank, a Japanese conglomerate, holding the other 49%. On paper, the entity was to be independent of the Chinese government, as the Chinese share would be divided between different investors. Furthermore, a majority of the board would be nominated by the parent company. In the end, neither defense against Chinese domination held.

While the board was independent, its Chinese CEO, Allen Wu, was not. He played ball with ARM international as long as there was a prospect of him potentially rising to power at the global level. When ARM entered talks with the American company NVIDIA for a merger, he lost interest, and instead did what many other Chinese executives on joint ventures have done before him. He opened shop across the street at a new firm, Alphatecture, and began transferring ARM China’s assets to that company. When the Board of ARM found out, they voted 7-1 to remove him. This, however, is China, and Wu had the “corporate seal,” the physical stamp or “chop” that confers upon the bearer authority to make deals, transfers, and decisions about the company. In China,  possession of the seal is nine tenths of the law (the remainder being the will of Xi Jinping). In this case, Wu used the seal to maintain access to ARM China’s assets, cutting off ARM’s board and employees not just from their accounts but also their own workplaces. The Chinese police looked on with wry amusement, a sentiment that is likely to be echoed by whatever Chinese judges hear the case against Wu.

It is unclear what ARM or anyone else can do, at least within China. It is unlikely Wu would have behaved in this manner without the foreknowledge and support of the CCP leadership. Rogue businessmen tend not to prosper in Xi Jinping’s China, as Jack Ma, the founder of Alibaba, found out the hard way.

Internationally, ARM will clearly refuse to transfer any further IP to ARM China, which thankfully, does not appear to possess the most recent designs. Western countries can and should move immediately to blacklist any products using designs licensed by ARM China or Alphatecture, but there is little they can do about the Chinese market, which is almost certain to be flooded with products using the now stolen IP. Nor is it clear how effective Western efforts will be against the flood of Chinese phones, tablets, and laptops which are likely to arrive in Asia and Africa. With time, and enforcement, the “real” ARM may be able to take advantage of the freer climate of the West to regain the technological lead lost, but it is hard to overstate the importance of what Xi has done. He has quite literally stolen one of the most important technology companies in the world, responsible for the most widely used processor designs on the planet and a firm that has sold over 180 billion processors worldwide for everything from superconductors to phones to computers to servers.        

A Growing Threat

In a single move, Xi has emancipated China legally from any dependence on foreign technology for processors. Henceforth, China will be able to contest ownership of IP, thereby being able to claim with disingenuous innocence that China is legally licensing Alphatecture’s IP when challenged on piracy. On a wider level, this reinforces the threat China poses to global supply chains. China already has a stranglehold on iPhone production. And the microchips, whose limited supply are causing shortages in everything ranging from new game consoles to cars, are produced almost exclusively in Taiwan, making the island an even more tempting target for Xi.

Xi’s move against ARM also represents a truth about the new China. There is no place for divided loyalties or ownership in China. Gone is the time when foreigners could wield power in China through either political agreements or ownership. But for Xi, even that is not enough. For China in the 2020s, 51% control is not enough, not of ARM China, nor of Hong Kong. As long as individuals who are not subservient to the CCP exist on the boards of major companies in China, or in the legislative assemblies of Hong Kong, islands of foreign influence and power remain. It is probably not entirely a coincidence that on the same day Mr. Wu made his move to seize control of ARM’s Chinese operations, the last opposition member of the Hong Kong legislative assembly was expelled. Combined with moves against the foreign-dominated private education market, which this spring was legally required to be non-profit, it is clear that China no longer sees a need for foreign workers, or foreigners in general.

This is important. For decades, there was a dream that if capitalism developed in China due to trade and investment, China would democratize. For all but a few delusional fools, this dream died by 2009. For most, it was replaced by a much more modest hope that through investment in China, Western firms could at least gain access to the market and make some profits to balance the trade deficits and provide a limited incentive for Beijing to avoid open confrontation. Now that has been revealed as a false hope, or worse, a lie. In the long run, there is no place for any Western investment in China, or for Westerners. All investment will be allowed solely to serve the interests of the CCP, and when it no longer does so, it will be terminated with scant consideration for legal rights or promises.

A Bamboo Curtain

China’s actions are not without precedent in recent history. In 1946, Sir Winston Churchill similarly warned during a speech in Fulton, Mississippi that the Soviet Union, far from seeking security in the countries it dominated, sought domination, or so entirely associated security with total domination that there was no meaningful difference:

From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in many cases, increasing measure of control from Moscow.

For Stalin, it was not enough that governments in the Soviet sphere of influence be friendly to the Soviet Union, or even Communist dominated. They had to be purely Communist, and furthermore, purely pro-Soviet Communist, with any hints of deviation crushed.

As the ARM affair starkly reveals, the efforts of Xi Jinping to expand China’s sphere of influence represent one of the greatest challenges of the 2020s, and U.S. policymakers of both parties have rightfully focused their attention on the problem. Joe Biden’s National Security Adviser, perhaps as an excuse, justified the withdrawal from Afghanistan on the basis that it allowed for a greater focus on the Chinese threat. But for all the attention levied on the spread of Chinese influence, far less attention is being paid to what is happening behind the “Bamboo Curtain.” For much as Stalin was not content merely to dominate within his zone of influence, but demanded absolute conformity, so too is Xi Jinping making clear that within China’s zone there is no room for anyone who is not Chinese. Nor for any Chinese individual who is not subservient to the CCP. This applies not just to politics but to economics and technology. For China, IP theft is not just about saving money and gaining a competitive advantage. It is about control. As long as China is forced to recognize the rights of any non-Chinese entities to any sort of property or technology within China, then China, in Xi’s view, is not sovereign.

The illusion is dead. It is time to heed Churchill’s call to face the new reality. The Bamboo Curtain is descending across the world.

Daniel Roman is the pen name of a frequent commentator and lecturer on foreign policy and political affairs, both nationally and internationally. He holds a Ph.D. in International Relations from the London School of Economics.

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Karen
2 days ago

i have constantly said that China is telling the Dem commies what to do. It’s time to fight back soon. We cannot let this happen. Time for letters, rallies, walks, runs, everything we can possibly think of. It’s happening very fast. WE HAVE TO GET Biden outta there.

Hal
3 days ago

It’s not a DARE from China …. it is a quid pro quo payoff request from the China Commies in payback for the funds they have bought China Joe Hidin’ Biden in the past

Bill on the Hill
3 days ago

Biden will NOT stop anything where China is concerned, this is the reason why they, i.e. China put Biden into office as president of the United States… Has anyone actually come to terms with this reality yet? China, they move ever so slowly, inch by inch, stealing intellectual property with reckless abandon all around the world, America being their primary target for decades now…As stated in this article, once they achieve 51% majority in companies, it is simply a matter of time until they get 100% ownership, game over on that score, time to move on to the next one, decades later, they have a firm, iron clad grip on America’s industries, higher education of learning & currently all ( 3 ) branches of US government, as well as the US military under the jurisprudence of the US State Department, i.e. the Pentagon with it’s ( 2 ) WOKE generals being a good place to look where the influence of China is concerned, especially in light of the allegations leveled against General Mark Milley in aiding & abetting the enemy, i.e. China whilst he served under President Donald J. Trump.
Bill on the Hill… :~)

Kenneth D.
4 days ago

Biden and much of the Democrat Party hierarchy have been collaborators and enablers of Communist China for decades. Bill Clinton and Al Gore both received major contributions to their presidential campaign coffers, as well as unreported backroom support for their cooperation and enabling of Chinese procurement of American technology and military proprietary information. Hunter Biden has been a stooge and bag man for his father and foreign powers since Joe’s days as acting VP. Give the Chinese credit: they are experts at attaining political, economic and military advantage the old fashion way…. simply steal or extort it from the weak, greedy and gullible.

BonHagar
4 days ago

Communists have always had to steal intellect because communism by its very nature isn’t intellectual. It’s as brutal and incurious as any 7th century religion.

FedUp
4 days ago

Funny how we never counter punch by nationalizing any/all Chinese holdings in the US. But then again, that would mean nationalizing the president.

Hal
3 days ago
Reply to  FedUp

China Joe Hidin’ Biden was nationalized by China (along with his family) long ago … and the News Media has strained its lilterary neck to keep that out of the news as much as feasible.

Garye
4 days ago

Joey baby, the 50 year corrupt ,failed politician cannot do a thing, china OWNS him and the democrats.

Last edited 4 days ago by Garye
Philip Hammersley
4 days ago

The CCP is now going to get the “quid” for the multi-million $$$ “quo” which they provided meth head Hunter Biden! Biden is toothless even if he had a desire to do something. And he has ZERO desire to cross the Chinese!

PIDL
4 days ago

“RISC” means “reduced instruction set computers. This is old technology. But it is used in semiconductor companies producing microcomputers. It looks like China is trying to get the ability to “license” the technology to all microprocessor companies to pay them for every microprocessor they build. Think of all of the microprocessors used in most electronics from cell phones to automobiles all over the world. One can see why they want to own this company, ARM. This is the kind of thing I would expect corporations to do, not governments. Hopefully there is a new technology that replaces RISC. I need to go research this.

PIDL
4 days ago

This has always been about money. This is more like raiding of corporations instead of Socialism. The reason they went after Trump was because he was stopping the sell out to China. The Chinese have always been thiefs, stealing intelectual property at every turn. And the greed of the “American ” companies has enabled this to happen more easily. They all saw dollar signs when they thought they could buy into the Chinese market. But they got the American corporations to teach them how to design and build new products. Now the steal is getting real.

And this is all caused by the “New World Order” philosophy. The US, with Obama leading it, decided that it is the leader of the New World Order. But the Chinese think they should be the leader of the NWO. Trump threw a wrench into the works. That is why the Chinese wanted to get rid of him. The Europeans wanted to get rid of him because he was making NATO step up to the plate and pay their fair share.

The Chinese want world domination as much as the Democrats. This will cause war with China.

It is all about money and power!

BAE
5 days ago

Biden can’t stop anything. He only wants to hurt the American tax payer. Close the pipeline, close small business, shut anything down that will hurt working people. He’ll never hurt CHINA. He is the WORST president ever!!!

edward
5 days ago

china is going to “push the envelope” while they can get away with it. They would never have pulled this stunt with Trump in office but they have milque toast biden by the ya yas and will do whatever they want. The elites are probably for all this because they would like the U.S. to become like china since it would be easier for them to maintain their power(they think).

Kyle Buy you some guns,and learn how to shoot
5 days ago

If notna civil war or a type of revolution soon,this country will continue to go down the tubes. Kyle L.

Ian Kostman
5 days ago

It’s sad that the only recourse remaining to the American people is civil war. I wish it weren’t so, and (if it does have to happen) my hope is that posturing will be enough; unfortunately, the level of crazy from the anti-American populace has already crossed over into the territory of the psychotic.

Patty Hanson
5 days ago

“Waiting” on Biden to stop it ????
That’s a joke that isn’t even almost funny. Joe is nothing but a ‘stage stooge’, enabling the furthering of America’s destruction by those “behind” the curtained staged.
China’s theft of ARM’s intellectual property is as good as DONE!

toprudder
5 days ago

Article says, “This is important. For decades, there was a dream that if capitalism developed in China due to trade and investment, China would democratize. For all but a few delusional fools, this dream died by 2009. For most, it was replaced by a much more modest hope that through investment in China, Western firms could at least gain access to the market and make some profits to balance the trade deficits and provide a limited incentive for Beijing to avoid open confrontation.” As I recall, the earlier theory was that if you develop trade ties between nations, they will be less likely to go to war with each other. But, as it turned out, China is playing the long game while we play the short game. China is willing to sacrifice business now, in order to gain global domination in the long run. Trump tried to balance the trade deficits, and had some success with that, but got roasted for his efforts.

Ruth A Lance
5 days ago
Reply to  toprudder

Well said.

Craig C Hopkins
5 days ago

Typical bought and paid for joe gifts his Chinese puppet masters. With another chip maker lost to China we are subject to another shortage along with the loss of the IP that the Chinese get to steal as they are either too lazy or too stupid to build themselves.

CPOBill
5 days ago

The EFFING chinks own the White House too!

Robert
5 days ago

All Democrats are idiots that vote for their own enslavement

Donald L Schmidt
5 days ago

While I understand the position of ARM, they are the ones that went to China to make the bucks, same as most American companies. I for one have no sympathy for these or the other
globalist companies, to heck with them all. I still try to buy American made goods but it is getting harder to find.

Conservative Veteran
5 days ago

Having no sympathy is understandable. Understanding where we will be as a nation when China takes Taiwan, is what is important. The Biden Admin will do nothing except show weakness. Condemning American manufacturers for leaving the high taxes of the US is wrong. Condemning the Government for the imposition of high taxes and support for out of control unions is condemnation well placed. Now congressman, senators and Biden all have enrichment deals with China. China is paying for our demise and the left is glad to see the country fall. The leftwing run schools have been indoctrinating the youth to be commies for decades. The shining city on the hill is no longer shiny. It is time to stand or time to fall.

PaulE
5 days ago

Good to see someone else understands the long-term ramifications, rather than just concentrating on “the outrage of the moment” so many seem to be stuck in. The level of discussion needs to quickly evolve beyond either name calling or political talking points copied from the media. Neither one does anything meaningful to change the conditions of the game in motion between China’s CCP and the rest of the world. Time is NOT on our side, if the American people don’t stand up and forcibly demand meaningful change.

Sending letters or making phone calls to elected representatives does nothing, because those letters and calls are ALL answered by low-level staff members issuing either form letters or canned responses. Politicians are motivated by one thing: Fear of losing their position and then having to try and earn a living in the private sector. Most can’t cut it in the private sector, so any they sit up and pay attention to anything that might cause them to lose their public position. Any means that leverages that fear will get and hold the typical politician’s attention. Everything else is noise to them and will be ignored.

Max
5 days ago
Reply to  PaulE

If you think about, the Left has control of the media and have used it to their advantage to sway the weak. Now the next part of the plan is to concentrate on economics or better yet, the destruction/devaluation of the US dollar as the world’s money leader. The country has realized that inflation has taken hold and the is question is will this lead into hyperinflation? The government needs the dollar to collapse so it can introduce digital currency, where the government can start controlling the buying and trading aspects of our lives. The government will be able to control and shut down people’s bank accounts at a whim to force people to do as they want — another loss of freedom that is forth coming.

PaulE
5 days ago
Reply to  Max

Hi Max,

Honestly I and most of the people I used to work with aren’t very concerned with the media, because we know that most of what they put out is highly politicized pablum or important news is never reported on at all because it doesn’t reflect positively on those on the left or fit a particular narrative. The media in this country has been feeding the American people a steady stream of pablum (can’t use the other word or I’ll be censored) for decades. I rely solely on verifiable source data to formulate decisions upon which to act or avoid. It is a more time intensive and laborious process than what most people do, which is simply plop down in front of the TV or read what passes for a newspaper these days and be fed a steady diet of political spin 24×7, but I manage to stay well informed on all the important issues globally. Which is why I was tracking events surrounding ARM several months ago.

As to the U.S. dollar, yes ultimately the United States government would like to eliminate cash and go completely digital. They do not need the dollar to collapse to introduce a digital version. The Fed and the Treasury are already in the process of formulating how a digital dollar could be introduced in the United States to get the ball rolling. Any number of justifications can be put forth to make a plausible argument to a public that wouldn’t understand the ramifications. Then after a year or two “test run”, the government would announce the phase out of physical money.

A digital only dollar would allow the government to track 100 percent of every financial transaction you do to: 1) Monitor your financial habits and develop a social scoring profile similar to how the CCP tracks and scores its people. The Democrats seem particularly enamored of the Chinese scoring method as a means to track and then punish those “not in compliance”. The “well behaved”, who comply with what the government wants, will be rewarded. Those that are NOT “well behaved” will find their accounts either frozen, debited some amount of digital dollars or, as in China, even eliminated all together. Thus bankrupting the individual as a lesson to others NOT behaving properly. 2) A completely digital currency would allow the government the power to immediately fine, confiscate or collect tax from virtually any individual or corporate entity, which is far more expansive than how the government can simply freeze bank assets in individual or corporate accounts.

Max
5 days ago
Reply to  PaulE

Paul, thanks for the comment.

toprudder
5 days ago

The author just said that China controls the iPhone production, so that leaves Android, which is Google. Google is not a friend of conservatives for example look at YouTube deleting anything which is conservative. So, what does that leave us for cell phones, 2 tin cans and a string?

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