I’d imagine that a Chinese sanction on ARM chips would cause quite some trouble for all the manufacturing of electronic devices that’s happening in China, and that’s even without considering the large consumer market that China is.
When Western Digital acquired HGST, the corporation was 'obliged' to hold off full integration for 2 years due to the requirements of the Chinese government:
According to this[1] 30% of Nvidia's sales are in China. Arm's numbers are similar. If China banned the sale of Nvidia GPUs or added some punitive tariff that'd hurt quite a bit.
That can work both directions. If China is going to disregard all US intellectual property rights, then the US can do the same to China (which is the world's largest manufacturer and has at least as much to lose as the US does over such an approach in the coming decades as they seek to move into high value manufacturing increasingly).
That means as China produces its first leading semiconductor products, US companies are free to reverse engineer them and immediately begin producing them (whether in Vietnam, Mexico, Taiwan, South Korea, India or Arizona and Texas), all without compensating China a dime.
As China begins producing its first leading pharma/biotech products, US companies are free to steal all IP from those companies and sell it as their own all around the world, with zero compensation to China.
And so on.
China is going to become the world's largest economy and will soon have the most to lose (if they don't already). Let's see how they like it when the tables are turned.
US has massive IP portfolio advantage, it will lose more. IP intensive sectors account for 1/3 of US GDP and affects as much employment. China is very far away from that and even if she creeps towards or surpass parity, these sectors will employ relatively smaller fraction of total population, i.e. it will affect Chinese society less - these nascent sectors may mature slower or not progress, versus US/west already heavily invested would actively regress. These scenarios have very different ramifications.
It's in both US/west and Chinese interests to maintain general IP racket and deal with sectors of exception. China is obviously not going to respect IP that it is willing to license if said denied via sanctions / geopolitical posturing. Just like military R&D, lack of access = valid rationale to espionage and undermine. West sanctions arms export to China after Tiananmen, now China has massive indigenous military industry. Semiconductors seems no different. Would have been better to draw out reliance on foreign hardware.
I think we do. They've had a very favored status for decades now. I didn't like a much of what Trump did, but playing hardball with China, I definitely liked that.
The winner would be us, as we have more to choose from, and since RISC-V is open nothing much will stop non-Chinese manufacturers from also making their versions. We may see a reverse version of the familiar Chinese tech cloning in this case.
NVIDIA has significant board design and assembly work in China. Plus they would not want to be locked out of a large economy. A good chink of ARM's revenue is probably already coming from China and sanctions could hurt that as well
Sotbank holds massive investment in China. For instance Softbank own 25% of Alibaba (this 25% are way more valuable than ARM). So yes they do have a large power over Softbank not complying to their decision.
I have to agree, if companies based in China can't license ARM chips (like Rockchip, Allwinner) and can't manufacture ARM chips then what are they going to put into all their electronics from Xiaomi, Huawei etc?
They'd have to start manufacturing their existing ARM design without license (good luck exporting that).
Pulling that on a strategically located island with its own government and a military that has been preparing for that exact eventuality will be a LOT harder than with Hong Kong.
The chips might be mostly produced in Taiwan, but they are mostly assembled into products in China. If China banned use of ARM chips in products that would disrupt basically the entire smartphone supply chain. Of course, this would greatly harm China too. But they can still use the threat of doing without actually doing it.
The majority of Samsung's phones are made outside of China (eg their huge presence in Vietnam). It can obviously be done and done affordably. Samsung wouldn't do that just for fun. If Samsung can move their assembly out of China, so can Apple.
Don’t forget that Apple is slowly ramping up its manufacturing presence in India, in addition to Vietnam mentioned by another comment, to further mitigate its over reliance on China.