Arm’s Joint Venture with China: Best News Since ZTE Ban

Since the start of the China-U.S. trade war, the United States has repeatedly attacked China’s weaknesses, letting more and more Chinese realize the importance of China-made chips. On May 1, Arm Holdings, a British multinational semiconductor and software design company owned by the Japanese SoftBank Group, announced an Arm joint venture in China. Arm‘s new joint venture began operations in late April and has taken over Arm’s business in the Chinese market. Furthermore, sources reveal that the joint venture plans to IPO in the A shares market, China’s domestic stock market. It is reported that the new joint venture, named “Arm mini China”, is based in Shenzhen, with the Chinese partner controlling 51% of the shares while Arm Holdings owning 49%. The joint venture will take over all of Arm’s business in the Chinese market, including licensing and royalties businesses with Chinese companies.

51% of the Arm joint venture is owned by their Chinese partner

Arm is one of the most influential chip technology providers in the world. Currently, about 90% of the world’s mobile devices are using Arm’s chip technology. Companies such as Apple, Samsung, Huawei, Qualcomm, Broadcom, MediaTek and many others all need to license technology from Arm to develop chipsets for smartphone, tablets, wearables and various connected devices. Arm Holdings was acquired by SoftBank for $32 billion in an all-equity deal two years ago.

According to some analysts, the establishment of the Arm China joint venture is also a breakthrough in the chip field for China. China is currently vigorously developing its own semiconductor industry to cut reliance on foreign suppliers. Especially after the ZTE ban, China realized the urgency of developing its own indigenous technology in the industry.

Arm has not released its sales statistics in the Chinese market, but according to analysts, it is estimated that 25% of the company’s revenue come from China. According to Rene Haas, the EVP and president of Arm’s IP Products Group, Arm’s business growth in China is faster than in any other countries and it is expected to become the largest market for Arm within five years. In addition, there are also reports that the Arm China will IPO in the A shares market in China in as soon as 2018.

This article originally appeared in zol and was translated by Pandaily.