Softbank is to sell a majority stake in the Chinese arm of Arm Holdings for $775.2m

Arm Holdings, the British chip designer owned by Softbank Group, has announced the upcoming sale of a majority interest in its Chinese semiconductor design unit for $775.2m (£580.3m).

The company is selling 51 per cent of its Chinese business, Arm China, and will cede control of the unit following the sale. Arm Holdings intends to run it as a joint venture with Chinese partners, with the transaction to go ahead at the end of June.

Parent company Softbank has said that the sale is intended to allow the group to expand further into China through the joint venture, saying that the Chinese market is “valuable and distinctive from the rest of the world”.

Softbank bought Arm Holdings for £24.3bn in 2016, but signalled plans to sell a 25 per cent interest to its Saudi-backed Vision Fund in March this year, and potentially relist the company as early as 2021.

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Around 95 per cent of all advanced chips designed in China last year were based on Arm technology, with the soon-to-be-sold unit contributing to about 20 per cent of Arm’s total sales, according to data provided by Softbank.

Following the sale, Arm Holdings will continue to receive a significant proportion of all license, royalty, software and services revenue earned by Arm China’s licensing of its chips.

A source close to the deal told Reuters that Arm China could be sold to a consortium led by Hou An Innovation Fund, which is jointly managed by Arm and Chinese private equity firm Hopu Investments.

A document seen by Japanese newspaper Nikkei put the new business’ forecast revenue at $1.89bn by 2025. Arm Holdings itself plans to reach net profit of $30m for 2018 on sales around $398m.