Arm wrestles with joint China venture as SoftBank eyes IPO

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The recent history of Arm, the Cambridge-based chip designer, has been full of twists and turns. Listed on the FTSE until it was privatized by owner SoftBank in 2016, the latest news relates to the nearly two-year struggle with its own joint venture in China.

Breakaway arm China, led by Allen Wu, is denying the company an opportunity to audit its finances — a major hurdle in SoftBank’s hopes for a major IPO debut for the tech company.

Arm’s solution involves the transfer of shares in Arm China to a SoftBank special purpose vehicle, according to a Report by Arash Massoudi, Anna Gross and Ryan McMorrow. That would change the relationship from an equity interest to a licensing agreement, allowing Arm to receive royalty income but not having to audit its finances.

In theory, the agreement would boost SoftBank’s hopes of completing Arm’s IPO within a year. A proposed $66 billion sale to Nvidia that would have been a record deal for the chip industry collapsed in February.

In practice, the path is difficult. Wu holds the “chop,” the traditional company seals that are the only means of authorizing official documents in China, making it difficult to change the registration of domestic companies without his involvement.

Add to that the small matter of the local government in Shenzhen, which Arm and SoftBank have been negotiating with for months. People briefed on the discussions told the Financial Times that the government sees the dispute as an opportunity to win concessions amid fears Arm may one day stop shipping key semiconductor blueprints to China.

Arm’s post-2016 story was one of the collisions of technology and geopolitics. It was Alex Younger, the former head of British Intelligence among many who expressed dismay at SoftBank’s plans for a US listing. How the next stage of the company’s Byzantine journey unfolds remains to be seen.

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Arm wrestles with joint China venture as SoftBank eyes IPO Source link Arm wrestles with joint China venture as SoftBank eyes IPO

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