US-China Tensions Pose Headwinds For British Chip Designer Arm's IPO Ambitions: Report

China resisted Softbank Group Corp SFTBF SFTBY -owned U.K. chip designer Arm Ltd's plan to offload its troubled joint venture in the country.

Chinese officials refused to process the paperwork confirming Arm China's transfer to a new Vision Fund entity since it submitted the documents to business regulators in May 2022, Financial Times reports.

Reportedly, Beijing was determined to keep Arm as the unit's largest shareholder as the U.S. tried to cut off China's access to cutting-edge semiconductor technology. Arm's semiconductor blueprints underpin almost all mobile phones and serve servers, cars, and other devices.

Arm told FT that the share transfer was complete as far back as June and reiterated this position this week. The Japanese group's financial filings show a new Vision Fund investment in Arm China for Q1 of 2022. They indicate that the China stake shifted to a Vision Fund entity called Acetone Limited. 

But the official and current corporate records in China show Arm Ltd U.K. retains its 47.33% stake in Arm China. Uncertainty about the transaction's status could hinder Arm's public listing ambitions.

SoftBank chair Masayoshi Son eyed a successful IPO to help the Japanese group mount a turnaround.

SoftBank aspired for an unusual dual primary listing in New York and London, despite different exchanges' higher costs and regulatory complexities.

Bankers close to SoftBank warned against a single listing in London driven by attractive incentives and other temptations. London has faced flak for its unattractiveness to fast-growing companies, given the potential for higher valuations and deeper pools of investor cash in the U.S. 

Therefore, the dual listing implied that Arm could get index inclusion in both markets, boosting the funds to invest in the company and fast-tracking it into the FTSE 100.

The China business has been a significant growth driver for Arm. Sales at Arm China have risen from $600 million for the 12 months to March 2021 to more than $800 million last year. 

Price Action: SFTBY shares traded higher by 0.59% at $20.12 on the last check Thursday.