ARM to cede control of China operation in $775-million deal
Chip designer's decision will boost semiconductor industry in the world's second-largest economy and boost 'Made in China 2025' program
The deal is likely to be worth US$775 million. Semiconductor designer ARM, part of the SoftBank Group, plans to cede control of its Chinese business to a group of local investors.
Even though the price-tag looks bargain-basement, the implications will be huge.
At least 90% of the world’s mobile devices use the ARM chip “blueprint,” or the “DNA” of semiconductors. License fees and royalties generate major income for the British-based company.
Earlier this year, ARM set up a joint venture in Shenzhen’s tech hub. Then last month, plans emerged that the company was planning to hand over control to a Chinese consortium, including Hopu-Arm Innovation Fund, which is also known as Hou An Innovation Fund, according to China’s Ministry of Science and Technology.
“Arm will be selling the 51% of ARM Technology China to a consortium led by Hou An Innovation Fund, which is jointly managed by ARM and Chinese private equity firm Hopu Investments,” Reuters reported, quoting a “source” involved in the deal.
The chip designer will then form a joint venture with the consortium.
ARM’s parent company SoftBank stressed the agreement would help boost opportunities for the high-tech firm in China, SoftBank said in a statement.
“ARM believes this joint venture, which will license ARM semiconductor technology to Chinese companies and locally develop ARM technology in China, will expand ARM’s opportunities in the Chinese market,” SoftBank stated.
Obviously, sharing future technology by boosting funding for further research and development in the microchip field will become a priority, as it is part of President Xi Jinping’s “Made in China 2025” policy.
“[Yet] it is hard to predict how long it will take for China to catch up with others, or successfully develop its own core technologies, but for traditional chip sectors, the time will be longer,” Geng Bo, the vice-secretary general of the inappropriately named China Solid State Lighting Alliance, a technology research and investment firm in Beijing, was quoted as saying.