Mobile chip designer Arm is preparing to sell a controlling interest in its Chinese business to local investors for $775 million. Arm parent SoftBank says Arm will sell 51% of its equity in Arm Technology China to an investment group in order to "form a joint venture for Arm's existing semiconductor technology IP business in China." SoftBank did not name the investment group, but according to Reuters, the group is led by Hou An Innovation Fund.
"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 said in a press release.
SoftBank also said Arm believes that 95% of all advanced chips designed in China in 2017 were based on its technology, and it derives roughly 20% of its revenue from its semiconductor technology IP business in China.
Arm does not make chips, but it creates the software and reference designs that companies like Qualcomm, Huawei and MediaTek use to design mobile chips. SoftBank Chairman Masayoshi Son has said Arm's intellectual property will be foundational to the chips that will connect the internet of things.
Rene Haas, president of Arm's intellectual property group, told the Financial Times that his company's Chinese partners are using the very same technology they were using prior to the establishment of the joint venture. He said the primary difference is that now they have a contract with a Chinese company rather than a British company.
Arm's new Chinese joint venture announcement comes as several nations are taking a closer look at technology transfers to China. A report (PDF) authored by the U.S. National Bureau of Asian Research recently found that "China, whose industrial output now exceeds that of the United States, remains the world’s principal IP infringer. China is deeply committed to industrial policies that include maximizing the acquisition of foreign technology and information, policies that have contributed to greater IP theft. IP theft by thousands of Chinese actors continues to be rampant, and the United States constantly buys its own and other states’ inventions from Chinese infringers."
This is the second major transaction reported for Arm since the company sold itself to Japan's SoftBank for $32 billion in 2016. Two months ago, several news groups reported that SoftBank is selling 25% of Arm to Masayoshi Son's $100 billion Vision Fund, a vehicle formed to invest in technology companies around the world.