China blocks SoftBank's $5.4 billion takeover of ABB's robotics arm in national security review
ABB said on Thursday that Chinese regulators had blocked the $5.4 billion sale of its robotics division to SoftBank, in a decision that sent the Japanese group's shares down almost 7% and showed Beijing's growing willingness to veto foreign deals involving key technology.
China has blocked SoftBank's $5.4 billion takeover of ABB's robotics division, dealing a major blow to the Japanese technology group's ambitions in robotics and showing Beijing's growing willingness to veto foreign deals involving key technology.
ABB, the Swiss-Swedish industrial company, said on Thursday that the sale of its robotics arm to SoftBank, which was announced last year, had been blocked by a Chinese regulator that conducts national security reviews of foreign investments. The Financial Times first reported that the deal had been stopped, citing multiple people familiar with the matter, and Reuters carried the report while noting that it could not immediately verify it. A spokesman for SoftBank did not respond to messages seeking comment.
China's approval was needed for the acquisition to go ahead in part because so much of ABB's robotics business is tied to the country. China is ABB's largest robotics market, and about 90 percent of the machines it builds for Chinese customers are manufactured locally. The company employs thousands of people in China, and at a factory in Shanghai it produces a variety of products used for manufacturing and automating tasks such as handling heavy materials and polishing.
According to the Financial Times, Chinese authorities were concerned that robotics data could be transferred overseas and used to train artificial intelligence models. ABB's decades-long ties to Chinese manufacturing businesses give it access to valuable data on robotics technology, and Beijing appears unwilling to let that data, and the expertise behind it, pass into foreign hands as part of a takeover.
The decision fits a wider pattern. China is taking an aggressive approach to reviewing foreign deals involving key technology and sensitive industries. In April, regulators forced Meta to unwind its $2 billion acquisition of the Chinese artificial intelligence start-up Manus, citing national security concerns, a move seen as a signal of the government's determination to keep important technology and talented engineers from being acquired by foreign companies.
For SoftBank and its founder, Masayoshi Son, the blocked deal is a significant setback. Son, one of the technology industry's biggest believers in artificial intelligence, has staked his company's future on the technology and has viewed robots as the essential link between artificial intelligence and the physical world. SoftBank has invested roughly $65 billion in OpenAI, the maker of ChatGPT, and billions more into data centre businesses.
Concerns have grown, however, that Son has put too much emphasis on artificial intelligence. On Thursday, shares of SoftBank fell almost 7 percent and are down nearly 30 percent over the past year. The Democratic sweep in the United States midterm elections on Tuesday also hit the shares of some big technology firms, as many of the winning governors and legislators have pushed for stricter oversight of the artificial intelligence build-out, which could slow its expansion.
China is not alone in using national security reviews to intervene in technology deals. Regulators in the United States, the European Union and Britain have also stepped into transactions involving semiconductors, quantum computing and other technology, as technology development takes on more strategic importance in government planning around the world.
What happens next is far from clear. ABB must now decide whether to keep its robotics division, look for another buyer in a market where Chinese approval would still be needed, or restructure the business. SoftBank, meanwhile, may have to rethink a central part of its artificial intelligence strategy, since owning a major robotics business was meant to give it a physical presence to match its huge investments in AI software and infrastructure.
The episode is also likely to make other companies think twice about cross-border technology deals that touch China. With Beijing, Washington, Brussels and London all willing to block transactions on national security grounds, the regulatory risk around major technology acquisitions has rarely been higher, and data, the fuel for training AI models, now sits at the centre of those decisions.
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