Arm China Remains A Wild Card

Softbank only owns 48% of Arm China having sold off the rest to a number of Chinese funds with some of which, Allen Wu, the sacked former CEO of Arm China, is associated.

However Arm’s China sales represent 24% of  the company’s total sales.

“We depend on our commercial relationship with Arm China to access the PRC market,” said Arm’s IPO filing, “if that commercial relationship no longer existed or deteriorates, our ability to compete in the PRC market could be materially and adversely affected.”

Arm is also under the cosh of the US restrictions on exporting tech to China. It says it has to limit licences to lower-performance designs.

Added to which, Arm’s biggest customers get substantial percentages of their revenue from China – Apple 19%, Qualcomm 64% and Mediatek 80%.

Arm blamed a Q3 sales drop of $28 million, including a  $12m fall in royalty revenues,  on  US “trade protection and national security policies”.

All of which make the company’s China revenues unpredictable which goes some way to account for the widely differing valuations of Arm which range from from $19-73 billion.