SoftBank has announced it is offloading 51 per cent of chip designer Arm's Chinese subsidiary to a China-led group of investors in a deal worth $775.2m.
Japan-based SoftBank expects the deal to be done in June 2018 and while it will retain the remainder of Arm and continue to enjoy licensing and royalty revenues, Arm China will no longer be a SoftBank subsidiary.
SoftBank acquired Arm back in 2016 and the chip designs of the Brit silicon botherer can be found in the majority of mobile devices around the world, including China, which accounted for around 20 per cent Arm's revenue in the fiscal year to March 2018.
With the acquisition of Arm Holdings itself coming in at over $31bn, the sale of 51 per cent of Arm China for $775.2m seems a little on the low side.
The deal comes at a time when trade relations between China and the US are strained, with US sanctions causing headaches for Chinese manufacturers. Mobile maker ZTE announced last month that it was having to halt operations due to a US government block on American suppliers selling its hardware and software, though Reuters reported today that the ban may be lifted soon.
China will also have eyed up the difficulties encountered by Broadcom during its aborted attempt to acquire US-based Qualcomm. The Committee on Foreign Investment in the US (CFIUS) will be unable to directly weigh in on the potential for technology transfer this time around.
Once completed, the sale will make it easier for China to get hold of chip designs to accelerate the growth of its indigenous tech industry, something that may alarm chipmakers such as Intel and Qualcomm as the republic continues with its "Made in China 2025" strategy to decrease dependence on imports. ®