Alibaba, the Chinese technology giant, will not be able to buy some of the most advanced products after Arm hopes that the US and the UK will not allow licenses to sell the technology in China.
The British company announced that the US and UK will not allow the sale of its new series of Neoverse V due to the high performance, according to people with knowledge of the sale. The move affects Alibaba’s T-Head chip unit and other Chinese units.
This is the first time that Arm, owned by the Japanese technology company SoftBank, has decided not to send its most dangerous designs to China.
Neoverse V falls under Wassenaar – a coalition of 42 nations designed to stop dual-use technology from being used for military use – but Arm needs US and UK licenses to sell more technology.
The result comes two months after the US introduced tough measures abroad to prevent China from acquiring chips or securing technology and equipment to make advanced semiconductors in the country.
Paul Triolo, a China and technology at the Albright Stonebridge Group consultancy, said that the US commerce department’s October 7 export controls renewed restrictions in ways that affected the type of technology produced by Arm.
“Key companies in the semiconductor supply chain, including key IP players like Arm . . . must determine whether the capabilities provided in their offerings meet or exceed the specific needs of the new [October 7] business law,” said Triolo.
Although Arm can apply for licenses to sell the technology, the odds of success are very low because the US plans to deny China technology that can have military applications. When the US introduced the new measures in October, it was emphasized that there would be an intention to deny licenses to sell technology related to chips in China.
Arm, which is headquartered in the UK but has major operations in the US, has been seen as involved in the Biden administration’s use of models aimed at Beijing. Like technology companies around the world, Chinese companies rely heavily on Arm’s plans to build devices from smartphones to servers.
“We feel that the western world sees us as second-class people,” said one engineer from Alibaba’s T-Head. “They don’t buy good products from us even if we have money.”
According to the engineer, the American sanctions create a two-part system, pointing out that Neoverse V, which was announced last year, has already been used by Amazon Web Services in the US for its platform the image of the cloud computing chip.
Arm’s intellectual property underpins many of the world’s chips and is used by many companies that are developing cutting-edge technologies.
The tensions between China and the United States have already forced some Chinese naval companies to look at the use of open source technology in Arm’s model called Risc-V.
Arm sells the prototype for processors – the electronic chips inside a computer to be finished there are related functions – and for “cores”, the units in the machine that receive and process information.
In the past year, Arm has released several new flagships, including the Neoverse N2 and the Neoverse V1 and V2, which are the latest high-performance models to date. and designs that appear to originate from the US.
Chinese companies have been prevented from buying the Neoverse V2 and its first generation, V1, because of US and UK sales bans related to the technology listed under Wassenaar, according to two people who briefed the reason behind the action.
The widely publicized non-proliferation agreement was made in 1996 by more than 40 countries, including the UK, the US and EU members to limit the sale of weapons and products that can have a dual purpose. .
Arm had previously planned that it could not sell the IP to China because the “US origin” technology would fall under Wassenaar’s control and would require an export license from Washington.
Arm said that, as a global company, it is “committed to complying with all export laws and regulations in the jurisdictions in which it operates”.
The British government said it would not comment on individual requests but noted that it is “committed to supporting British businesses and schools to work with China in a way that reflects British values and takes into account national security concerns”.
The US did not respond to a request for comment. Alibaba declined comment.
The United States is trying to get important European and Asian partners in the chip sector, especially the Netherlands and Japan, to legalize the importation of chip devices. The US needs help from its partners to meet the severe restrictions imposed by the Biden administration in October on American semiconductor equipment manufacturers.
An executive from another chip design firm in Shenzhen said that when SoftBank’s $66bn sale of Arm to Nvidia fell through earlier this year, many Chinese engineers regained confidence in the use of Arm’s design without fear that they will later be separated from the supply chain.
But he said the company realized “how stupid” it was when it was told it couldn’t buy the Neoverse V1 for high-end chips being developed for cloud computing. The director added that it was clear that the decision “is not about money” but because of exports.
Switching to N2 means that the company “will take a long time to reach our goals”, he added, because “the overall performance of the V1 will kill the N2 on all fronts “.
A person close to Arm said the company is working with Alibaba and other Chinese partners to identify solutions to help them meet their performance requirements while complying with the latest export order.