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Arm is set to transfer shares in its renegade China joint venture to a special purpose vehicle owned by parent company SoftBank, according to reports from The Financial Times and Bloomberg on Tuesday which cited people familiar with the matter.

Arm currently holds a 47.3% equity stake in Arm China, The Financial Times reported. Following the share transfer, Arm will end up holding less than 20% of Arm China, according to Bloomberg. The report added that Arm will treat Arm China like any other license-paying customer as opposed to a fully controlled subsidiary.

Assuming it goes ahead, the share transfer may help SoftBank to float the British chip designer in New York next year after it failed to sell the company to Nvidia for $40 billion.

Headquartered in Shanghai, Arm China is a joint venture between Arm and Chinese private equity firm Hopu Investments. Arm China’s onetime chief executive officer, Allen Wu, took control of the business after SoftBank bought Arm for $32 billion in 2016. The board of Arm China fired Wu in 2020 for conflicts of interest but he has reportedly refused to leave and continues to run the company on a daily basis.

Arm declined to comment and SoftBank did not immediately respond to a CNBC request for comment.

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