Caixin
Jun 05, 2018 07:10 PM
BUSINESS & TECH

ARM Holdings Sells Majority Stake in China Chip Unit

Masayoshi Son, chairman and CEO of Softbank, ARM Holdings’ parent company, gives the keynote speech at SoftBank World 2016 in Tokyo in July 2016. Photo: VCG
Masayoshi Son, chairman and CEO of Softbank, ARM Holdings’ parent company, gives the keynote speech at SoftBank World 2016 in Tokyo in July 2016. Photo: VCG

British telecom chip giant ARM Holdings PLC said Tuesday it will sell a majority stake of its Chinese unit for over $775 million to local partners, a move it said will help expand business opportunities in China.

ARM will sell a 51% in ARM Technology (China) Co. to Chinese investors to form a joint venture, in a deal expected to close this month, parent company SoftBank Group Corp. said in a statement. It didn’t name the buyers, which it referred to as “partners” and “financial investors.”

Foreign technology heavyweights, including Microsoft Corp., Cisco Systems Inc., Western Digial Corp. and Qualcomm Inc., have all set up Chinese ventures whose majority stakes are controlled by local partners. This allows them access to the market as Beijing races to groom homegrown technology powerhouses. Having a local company as controlling stakeholder also eases Beijing’s national security concerns involving sensitive technologies.

The Chinese market is “valuable and distinctive from the rest of the world,” said SoftBank in the statement, adding this joint venture will license ARM semiconductor know-how to Chinese companies and help develop its technology in the country locally. ARM’s name isn’t well known, but its technology is used to power most of the world’s smartphones.

SoftBank said it estimates that around 95% of all advanced chips designed in China last year were based on ARM technology. In the fiscal year ending in March, China made up around 20% of ARM’s total revenue, the statement added.

Japanese conglomerate SoftBank acquired ARM, the U.K.’s most valuable technology company, for $32 billion in 2016 in an all-equity deal.

Caixin reported last month that ARM was forming a venture (link in Chinese) with the Hopu-ARM Innovation Fund, backed by a number of investors including China’s Hopu Investment Management Co. Ltd., China Investment Corp., Singapore’s Temasek Holdings and ARM itself. Hopu-ARM manages an $800 million fund.

Contact reporter Jason Tan (jasontan@caixin.com)

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