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Comment by jiggawatts | Hacker News Reader

It never occurred to me that a division of a company could just... secede from the parent company.

What could the parent company even do if something like this occurred across less-then-friendly national boundaries? Could the parent company sue to force the errant division to close? In what court?

It's bizarre that it's not more common...

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it's even more bizarre: Wu controls Arm China because he's physically in control of a seal that gives him power to sign documents with the company authority[0].

[0] https://www.bloomberg.com/opinion/articles/2020-07-01/main-s... look for "Who controls a company?"

This is so comical and yet so expected when you give arbitrary importance to things like that.

It's a cultural thing, though it does seem a bit extreme in this case.

Couldn't Arm publicly ignore that seal of authority? Kind of like when a certificate expires and you revoke it?

I don't understand how the guy controls anything. Even if say he has all the designs copied in China, Arm Global could just declare those are stolen designs and anyone that uses it without paying the global company directly would be in violation of that and could be sued (in other countries, if not China).

I think the only reason this comical and absurd situation continues is only because - like many tech companies before it - Arm continues to hope for bread crumbs in the "huge Chinese market" and accept being at the mercy of the CCP, even though this has proven to be a disastrous strategy for most other companies that thought like this. In the end, the government just gives your tech to the local companies, that end up dominating there, and maybe even globally later on, with your tech.

>Couldn't Arm publicly ignore that seal of authority? Kind of like when a certificate expires and you revoke it?

They did. And in other for a new Seal to be approved, it required something else ( I cant remember what it was ) which was also in the hand of the CEO. So in China under their law ARM China is perfectly fine and there is nothing they can / would do. ( Not that they are trying to help ) ARM UK and US can't do much apart from not supplying future design to ARM China.

I should note all of these was before UK and China's tension got worse.

reminds me of bearer shares

For those not familiar with them: https://en.wikipedia.org/wiki/Bearer_instrument

Most commonly know example is "bearer bonds", which are often used in heist movies and similar films, including, in the original script, in Ferris Bueller's Day Off[1].

[1] https://goat.com.au/ferris-buellers-day-off/today-i-learned-...

During WWI, the US took control of the US-local division of the British-owned https://en.wikipedia.org/wiki/Marconi_Company, reorganizing it into what would be known as the Radio Corporation of America — RCA.

Local branches seceding or being de-facto severed from their corporate parents happened several times in WW2.

Afterwards as well:

https://www.handelsblatt.com/english/companies/carl-zeiss-an...

As a Chinese subsidiary of a western company, isn't there a requirement that Arm China is 51% owned by Chinese owners. If the Chinese government pushed the matter, I imagine those 51% would have to vote the way China wants, so the parent company's mere 49% ownership counts for nothing if China wants otherwise

No, there is no such requirement. However, Softbank decided to sell a majority of its operations in China to Chinese investors in 2018.[1] It appears that fear of US sanctions motivated the sale.

1. https://asia.nikkei.com/Business/Companies/Softbanks-Arm-Chi...

Interesting that my entirely factual and accurate comment, with a source, is downvoted so heavily.

My guess is that they dont read the source, they just thought you were taking about ARM as a whole and mixing up with the recent news of Nvidia.

Other commenter is wrong, ARM the UK company only owns 49% of the JV, other Chinese companies hold the rest. Supposedly ARM + at least one other shareholder were in agreement about firing the JV CEO, meeting the 50% threshold. But I think you are right, if China really had an issue with something, what could you do?

It never occurred to me that a division of a company could just... secede from the parent company.

Typical in very corrupt countries. I grew up in one. People who lead big/important corporations are always part of the ruling party. And they do everything they can to stay in power.

And another data point, I was working for a startup one of who's investors was Sequoia, in a meeting a person from Sequoia advised us on some cloud company we can use, mentioned they are also investors in it. We asked about their China division, and he told us the China division while technically part of the same company, is in practice a complete separate thing and we shouldn't trust it at all.

Now that you mention it, it is weird. However, I'm guessing the two divisions are very integrated (especially in things like sales), so a division seceding would have to set up its own sales pipelines and basically become a competitor.

I don't know how easy that is, which probably explains why it's not more common.