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You may watch David Faber’s interview with Arm CEO Rene Haas and SoftBank CEO Masayoshi Son on CNBC Pro.
Arm’s China subsidiary is “doing well” with strong potential in data center and automotive applications, despite the geopolitical tumult of the previous couple of years, Arm Holdings CEO Rene Haas said in an interview with CNBC ahead of the corporate’s Thursday Nasdaq debut.
But SoftBank CEO Masayoshi Son, who made a fortune through Chinese juggernaut Alibaba, said SoftBank had reduced its “exposure in China” by a big amount.
Complicating that statement, nevertheless, is Arm’s dependence on Chinese customers who, for now, are still capable of purchase the corporate’s semiconductor technology and designs.
Neither Arm nor SoftBank, which acquired Arm for $32 billion in 2016, directly control their China subsidiaries. In 2018, SoftBank sold a controlling stake within the China business to a gaggle of Chinese investors. Arm now only directly owns around 5% of Arm China, however the group still accounts for nearly a quarter of Arm’s fiscal 2023 revenue, in response to pre-offering filings.
That relationship may face further pressures in the approaching months. The Biden administration has proceed to implement stringent export controls on high-powered semiconductors that might be used for artificial intelligence. The restrictions have already hit Intel and Nvidia, and while Arm doesn’t fabricate its own chips, it does sell designs to many chip firms.
The Biden administration has also introduced fresh outbound investment restrictions on key technology sectors.
Son was focused on SoftBank’s stake in Alibaba, which SoftBank has been reducing steadily over the previous couple of years. “A lot of the shares in Alibaba from SoftBank [are] already sold,” Son told CNBC’s David Faber in an interview.
The reduced exposure could have less to do with risks from China and more with SoftBank’s own portfolios. SoftBank has taken big losses on its Vision Fund I and II, although Vision Fund I is now back within the black. And one in every of the largest prizes in its non-public portfolio, TikTok owner ByteDance, has been under pressure from the U.S. government related to data collection practices.