Softbank-backed Arm warns of ‘significant’ China risk, mentioning the country 350 times in its IPO prospectus
- The interest in Arm will be keenly watched as a litmus test for investors’ appetite for the geopolitical and market risks associated with China
- Arm grabbed headlines in China last year after a bitter boardroom dispute broke out between the Chinese subsidiary and its former head Allen Wu
British chip architecture firm Arm has warned investors of “significant” economic and political risks from China, where it derives one quarter of its revenue, in its prospectus published this week.
Arm, owned by Japan’s SoftBank Group Corp , filed for its initial public offering (IPO) on the New York Stock Exchange on Monday, in what is likely to be the biggest IPO in nearly two years. But the future of the Cambridge, UK-based chip-design firm is overshadowed by its exposure to China, which contributed a quarter of revenues in the 2023 fiscal year.
“Arm flagged some risks related to its China business such as incomplete control or lack of oversight in its China venture,” said Brady Wang, an associate director with research firm Counterpoint.
The interest in Arm’s shares will be keenly watched as a litmus test for investors’ appetite for the geopolitical and market risks associated with China amid a shift to tech decoupling. In the risk section of the 229-page prospectus, Arm went to lengths to articulate what it sees as political and commercial risks in China.
Arm Technology (China) Co, or “Arm China”, was referred to 208 times in the prospectus. “China” was mentioned 222 times while “PRC”, the acronym for the People’s Republic of China, was cited 130 times.