As British chip designer Arm prepares to raise about $5 billion in an initial public offering (IPO) on Thursday, its China business has become a serious point of concern.
The SoftBank-owned firm used many pages of its IPO prospectus to warn investors of risks related to its exposure to China at a time of rising tension between Washington and Beijing over chip technology.
Its regulatory filing last month revealed that a quarter of its sales come from China, through an unusual relationship with an entity it does not control and with which it has a complex history.
Arm China is “an entity that operates independently of us and is our single largest customer,” the company said in its prospectus. “Neither we nor SoftBank Group control the operations of Arm China.”
Arm, which is based in Cambridge, added that the scale of its business in China made it “particularly susceptible to economic and political risks,” which could be worsened by tensions between the country and the United States or the United Kingdom.