China blocks SoftBank’s $5.4bn purchase of ABB’s robotics unit

In short: China has stopped SoftBank from buying ABB’s robotics division for $5.4bn.

What happened

China told SoftBank it will not approve the deal to acquire ABB’s robotics division, according to people familiar with the process. The decision came from China’s National Development and Reform Commission, a powerful government body that reviews deals it sees as important to the country’s economy and security.

ABB’s robotics business is heavily tied to China. China is its biggest market, and more than 90 percent of the robots ABB sells to Chinese customers are made inside China. ABB employs about 12,700 people in the country and opened a large robotics factory in Shanghai’s Pudong area in 2022.

SoftBank agreed to buy the unit last October. The deal passed China’s competition review in February, but then went through a foreign investment security review, which looks at whether overseas ownership could create risks. People briefed on the review said regulators were concerned about robotics data being sent abroad and used to train AI systems (like using factory records to teach a computer how to make decisions).

Regulators also reviewed ABB’s supply chain in China and pushed for some manufacturing to stay in the country. There were also discussions about keeping certain intellectual property in China, possibly by splitting off parts of the business to Chinese owners. SoftBank and ABB declined to comment.

Why it matters

Robots are becoming a key part of how companies try to produce goods faster and with fewer workers. China’s decision shows that governments can block deals if they think important know-how, data, or production could move overseas. That can slow down plans by global investors like SoftBank and could affect where future robots are designed and built.

Source: Financial Times