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Comment by scrlk | Hacker News Reader

F-1: https://www.sec.gov/Archives/edgar/data/1973239/000119312523...

The "risks" section is pretty interesting, e.g.:

"Arm China is 25% of our revenue, but we have no control over them, they have failed to pay us in the past resulting in us taking on additional costs to recover the money, also we have no way of knowing what they actually owe us and other than what they say, which has already been a problem"

The "ARM China going rogue" story is so weird. Although supposedly Softbank restored control last year? [1] So I don't know where things stand at the moment.

https://asia.nikkei.com/Spotlight/Caixin/In-Depth-How-SoftBa...

the article says that Wu is effectively still on the job, and Wu's own LinkedIn page claims he's still the boss there.

Having myself been part of a joint venture with the Chinese (in the education space), and having a Chinese employee go rogue, I only advise against western firms (even large ones with clout) from engaging in such ventures. The Chinese will take control by any means necessary and bleed you dry from the inside.

>Although supposedly Softbank restored control last year?

Nope, the F-1 addresses this: "Neither we [Arm] nor SoftBank Group control the operations of Arm China, which operates independently of us. "

How do they manage IP if they have no control over them? I see a pretty big issue

They don’t. They’re proper rogue and being China there isn’t much you can do about it

According to the filing they have extremely limited ability to influence them and yeah it is a big issue.

Which is terrifying - ARM's biggest risk in that regard is that ARM China can effectively shoot itself in the foot in the name of Chinese strategic/geopolitical/technological interests, and all their Chinese employees will have absolutely nothing to worry about.

I wonder if it would have been better for Nvidia to have bought ARM. Nvidia's cards might have been sufficient influence.

ARM learning the hard way what “49% ownership in a joint venture” really means.

Total revenue: 2.679bb Gross profit: 2.573bb

(page 18, FY2023)

96% gross profit margin? Ahh to be an IP licensing company....why would anyone invest in building physical things when there are opportunities like this out there! </s>

edit: clarify gross profit margin

Small correction:

Net income: 0.524 bb

So 19.6% profit margin. Still nice.

I'm not an accountant, but I think I'm referring to gross profit margin [1], which is revenue minus cost of goods sold (which is small for an IP licensing company, any company that actually sells hardware will be a fraction of that).

I think your math refers to operating margin, that's after they subtract all the operating overheads which are fixed, and not proportional to sales volume. In other words a 96% gross margin means they have virtually no friction to increasing sales.

Compare to Intel statement [2], they have a 35.8% gross margin and a negative operating margin this year, which would be the apples to apples comparison against 96% gross margin and 19.6% operating margin in the F1.

My read on the income line is they do a good job of 'spending money', but they are signaling that can be turned into things like dividends to shareholders once they IPO, perhaps by doing short sighted things like cutting R&D expenses and/or accounting tricks.

[1] https://en.m.wikipedia.org/wiki/Gross_margin

[2] https://www.intc.com/news-events/press-releases/detail/1637/...

in case, any one looking for F-1 (F1) for ARM, it is here.

(S-1 is for domestic corporations and F-1 is for foreign ones)

https://www.sec.gov/Archives/edgar/data/1973239/000119312523...

RISC-V is in the prospectus as a risk. Good for RISC-V!

>> RISC-V is in the prospectus as a risk.

One option is to embrace it as an opportunity. ARM designs some pretty good CPU cores, so imagine they offered good RISC-V cores as well. RISC-V can be free, but a lot of companies still license core designs.

>ARM designs some pretty good CPU cores, so imagine they offered good RISC-V cores as well.

This is the approach MIPS took. They deprecated their legacy ISA, embracing the industry-standard RISC-V.

Problem is, ARM's management hasn't shown any signs of actually being capable of doing this. It would have to be replaced, and the business model would need a deep redesign.

But everything hardware takes a long time. Can ARM survive until they have competitive RISC-V designs ready?

I will not bet on that.

There's another option:

For a SoC (or bigger uC) include both ARM & RISC-V cores. They can work side by side, be used as development platform for either, share memory or peripherals included in the SoC (or perhaps share different but overlapping subsets of those resources). Or a Big.Little style setup where the "Big" and "Little" are different ISA.

Where utilising chip resources 100% is not too important (like, in most applications), designers could simply work with the ISA cores they're comfortable with. Switch use to the other cores, use the same peripherals.

Would this be difficult to work with? Unlikely. Software support for such setups exists, suitable defaults / boot settings & go.

At the very least this would get ARM foot in the door if it turns out RISC-V eating ARMs market share (which is already happening, be it limited scale so far). Or collect the 'ARM tax' for SoCs whose designers wanted RISC-V but don't mind including ARM as well.

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