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Arm is set to transfer shares in its renegade China joint venture to a special purpose vehicle owned by parent company SoftBank, according to reports from The Financial Times and Bloomberg on Tuesday which cited people familiar with the matter.
Arm currently holds a 47.3% equity stake in Arm China, The Financial Times reported. Following the share transfer, Arm will end up holding less than 20% of Arm China, according to Bloomberg. The report added that Arm will treat Arm China like any other license-paying customer as opposed to a fully controlled subsidiary.
Headquartered in Shanghai, Arm China is a joint venture between Arm and Chinese private equity firm Hopu Investments. Arm China’s onetime chief executive officer, Allen Wu, took control of the business after SoftBank bought Arm for $32 billion in 2016. The board of Arm China fired Wu in 2020 for conflicts of interest but he has reportedly refused to leave and continues to run the company on a daily basis.
Arm and SoftBank declined to comment.