Beijing has urged chip designer Arm to work more closely with Chinese companies, indicating that the SoftBank-owned group plays a vital role in a semiconductor industry under intense pressure from US export restrictions.
Deputy Science and Technology Minister Zhang Guangjun on Tuesday urged Arm to deepen cooperation with Chinese universities, research institutes and companies during a meeting with CEO Rene Haas in Beijing.
Zhang said his ministry would continue to provide services and support to high-tech companies like Arm to develop in China, according to a statement from the ministry on Thursday.
Arm provides the core designs for the majority of processors made by the world’s chipmakers. Any move to restrict China’s access to this technology could seriously hamper the industry and further defeat President Xi Jinping’s goal of self-sufficiency in semiconductors.
The Haas meeting also comes at a critical time for Arm, with unresolved issues in China potentially complicating SoftBank’s plans for an IPO of Arm stock in New York.
For more than a year, China has stalled Arm’s plan to relieve his troubled joint venture in the country, with officials hesitant to sign off on the British group’s departure from its Chinese unit.
Arm moved last year to transfer shares in his Chinese joint venture to SoftBank after battling with local chief Allen Wu for control of the unit for nearly two years. While Arm and SoftBank claim the share transfer is complete, China has refused to process the paperwork confirming the transfer, according to current Chinese company records.
Despite Beijing’s efforts to keep Arm in the country, US and UK export controls have already prevented the group from supplying some of its most cutting-edge designs to Chinese customers. The restrictions are likely to increase as Washington gathers allies to work together to hinder the development of China’s semiconductor industry.
Haas’s trip to Beijing is his first since the outbreak of the Covid-19 pandemic in 2020. The CEO stressed China’s importance to Arm and pledged to “strengthen exchanges and dialogues going forward” and “(the company) actively integrate it into China’s scientific and technological innovation system,” the ministry said.
Arm China posted a profit of $49 million on sales of nearly $700 million for the year ended March 28, 2022. The unit directly passes a portion of the money it receives from Chinese customers to Arm through a licensing agreement, and Arm recognizes a portion of the unit’s profits. Arm reported total sales of $2.7 billion for the year.
In its annual report, the group said the transfer was completed but not registered in China, adding that it was “informed and understands that the registration status does not affect the validity of the transfer of property interests in Poor China”.
A successful listing of Arm is central to SoftBank chief Masayoshi Son’s efforts to turn around for the Japanese investment group, which has seen its fortunes sink amid waning investor enthusiasm for technology stocks.
Son recently stepped down from front-line positions at SoftBank to focus on Arm’s debut. The group announced in April that it had filed a draft registration statement in confidence with the U.S. Securities and Exchange Commission.
Arm did not respond to a request for comment on Haas’ trip to China.